DrumBeat: February 12, 2009

Prime Minister Vladimir Putin agreed on Thursday to consider more incentives to reverse declining oil output, as the energy minister delivered the grimmest outlook yet for the industry.

Crude output will drop by nearly 8 percent from last year's level through 2013 if the government doesn't provide further aid to producers, Energy Minister Sergei Shmatko said at a meeting that Putin convened at a refinery outside St. Petersburg to talk to oil executives.

Any potential incentives would further dent federal revenues, which are already expected to contract drastically this year on the back of low oil prices and the global economic crisis.

Algerian Oil Minister Chakib Khelil said today Opec's compliance with a series of cuts agreed in the second half of last year to stem the steep slide in oil prices would reach 100% by the group's next meeting in March.

"Right now, we have very good compliance. We have 85% which is unusual for compliance. By meeting time, we will probably have 100%," Khelil told Reuters on his way to a meeting at the US Department of Energy.

Demands by PDVSA, as the Venezuelan oil company is known, to sell 40 percent of the refinery´s output on terms of its own choosing are “unacceptable” because they may lead to the bankruptcy of Brazilian fuel distributors, Petrobras refining chief Paulo Roberto da Costa said today in Rio de Janeiro.

“We can´t give PDVSA privileges that could lead to the closure of Brazilian distributors,” da Costa said.

The government of the province of Alberta released a new strategy on today to guide development of Canada's oil sands, the largest oil resource outside the Middle East, despite plunging crude prices and collapsing investment in the region.

The province's Conservative government said it plans to speed reclamation of toxic tailings ponds, boost refining and processing of oil sands bitumen within Alberta, and ease the social impact of the massive investments needed to further exploit the resource.

NEW YORK (CNNMoney.com) -- The economic stimulus plan is unlikely to help boost the auto industry because some say tax incentives for car purchases won't save buyers nearly as much as had been originally proposed.

With less than a week to go before General Motors and Chrysler are due to submit long-term viability plans to Congress, a power vacuum in Washington is raising questions about the next steps in bailout of the auto industry.

HOUSTON (Reuters) - The collapse of oil prices has slowed efforts to tap vast crude oil and natural gas supplies that lie under the Arctic Ocean but countries like Russia, Canada and Norway are still vying for a potential bounty of energy riches trapped there.

The potential payoff is huge - the U.S. Geological Survey estimates that a quarter of the world's undiscovered oil and natural gas lies in the Arctic.

But the price tag for drilling wells and sustaining energy extraction in a desolate, uninhabitable winterland is also huge. And with crude oil prices down over $100 a barrel from July's record highs, some experts are wondering if even giant international oil companies can foot the bill.

Oil prices would have to hit $100/bbl versus recent levels near $35/bbl to justify multibillion-dollar investments, said Timothy Krysiek, an energy expert at Cambridge Energy Research Associates.

NEW YORK (Reuters) - Russian gas export monopoly Gazprom said on Thursday the first cargo of liquefied natural gas from the Sakhalin II project was on schedule for shipment in mid-March.

"It will leave in accordance with the schedule somewhere in the middle of March," Alexander Medvedev, the company's deputy chairman of the management committee, told Reuters outside a conference in New York City.

The cargo is destined for Japan and travel time is expected to be two days.

KNOXVILLE, Tenn. (AP) — It could cost as much as $825 million to clean up a river and a rural neighborhood after a massive spill of coal ash sludge from a Tennessee Valley Authority power plant, the utility's chief executive said Thursday.

A coalition of U. S. and Canadian green organizations said it will dog President Barack Obama during his visit to Canada next week with an aggressive anti-oil sands campaign.

The dozen groups, from the Sierra Club to the Council of Canadians, said yesterday they would run newspaper ads and organize petitions to keep the U. S. President from getting swayed into supporting production of oil from the Alberta deposits.

A few years ago, peak oil was relatively easy to understand. At some point in the future, and estimates varied as to exactly when, oil production was going to start declining due to a combination of geologic and geopolitical factors, prices were going to rise precipitously and a massive civilization-wrenching paradigm shift would start as the world transitioned from oil to other forms of energy.

Those who understood that oil was going to start running out one day spread themselves along a spectrum of just when this unhappy event would happen. Pessimists saw the decline of oil production beginning in 3 to 5 years, optimists said 10, 20 or 30 years, and most of the world's peoples did not have the faintest clue that the oil was ever going to run out. Things were so simple 18 months ago.

In 2007, however, it was revealed that a collection of realtors, appraisers, mortgage brokers, bankers, builders, financiers, insurers, securities raters and assorted others had been making lots of money by selling houses to people who could not afford them and then dumping the tainted mortgages on the world's banking system. When all the dust from these revelations settled, it looked as if many of the world's banks had suffered grievous if not fatal damage and what could turn out to be the greatest economic downturn of modern times had been set loose. So where does oil fit into all this?

Lawmakers in Mexico are trying to determine the whereabouts of island central to the country's oil claims, which appears literally to have dropped off the map about 10 years ago.

Bermeja island in the Gulf of Mexico -- a strategic marker defining US and Mexican maritime and subsea rights -- has disappeared along with documents backing up a bilateral treaty on major oil reserves in the area, fueling rumors of a CIA plot.

"There are two stories about how it disappeared: one is that global warming raised the sea level and it is under water," said Mexican lawmaker Elias Cardenas, of the Convergence Party.

"The other is that ... it was blown up by the CIA so that the United States would get the upper hand in Hoyos de Dona" -- the oil reserves area.

KIRISHI (Leningrad region) (Itar-Tass) -- The overall deficit of investments in the oil industry will exceed 200 billion roubles in 2009, Russian Energy Minister Sergei Shmatko said at a meeting devoted to the problems of the development of the oil industry chaired by Prime Minister Vladimir Putin on Thursday.

Russia (Reuters) - Russian Prime Minister Vladimir Putin said new oil fields could win tax breaks in a speech on Thursday that fell short of the sweeping tax changes sought by the country's oil producers.

Fiscal hawks in the Russian government are at odds with the oil industry over a new round of tax break proposals as the world's second-largest exporter balances the need for investment to safeguard future oil export revenues against the demands of the budget.

OTTAWA – Canada is waiting for Washington to state its plan for cutting greenhouse gas emissions and weighing the effects of the economic downturn before it issues regulations to force industry to cut its pollution, Environment Minister Jim Prentice says.

LONDON (Reuters) - Royal Dutch Shell Plc may trim its workforce with a plan to leave vacancies unfilled and to "ruthlessly" review its use of contract staff, according to an internal email seen by Reuters.

The email, sent by a senior executive in Shell's core exploration and production division, told managers "the world has changed" after crude prices collapsed from over $147/barrel in July to around $40/bbl now.

"Do not fill vacancies ... Reconsider how hard to hold on to securing current staff that may be on the fence re. retirement," Chris Haynes, Vice President Technical, EPT Projects said in the email.

Peak Oil’s impact on the United States will probably be more severe than what most other countries will feel. This follows from a different way of thinking about the problem – availability vs. production.

The captains of BP PLC and Royal Dutch Shell addressed the Cambridge Energy Research Associates conference in Houston with an optimistic message: Their fundamental assumptions for long-term growth in energy demand remain unchanged, despite the precipitous drop of energy prices in recent months. And the industry better continue investing to be ready when demand comes roaring back.

"The future is not canceled," said BP Chief Executive Tony Hayward.

Energy demand "will double between now and 2050" as the developing world becomes richer, said Shell Chief Executive Jeroen Van der Veer. The "art of today is how you can invest throughout the cycle," he said.

In their latest report, the IEA estimated that China, Brazil and other emerging countries alone will need investments of $360 billion a year through 2030 to meet future demand for oil. The IEA went on to say that in order to meet future demand for oil, the world as a whole will need $26.3 trillion in supply-side investments over the next 21 years.

With the current depressed price for oil, along with the banks not lending out a dime to anyone, this much needed investment just will not happen. This will lead to the world once again seeing triple-digit prices for oil, probably within the next two years.

A leading energy consultancy is warning that what it calls Iranian President Mahmoud Ahmadinejad's mismanagement of oil revenues could result in major economic woes for the country, regardless of the outcome of this summer's elections.

In a research note Thursday, Washington-based PFC Energy said a "toxic mix of populism and misguided priorities" under the hardline president have deepened Iran's dependence on oil.

Two weeks ago, in The Ecology of Social Change, I suggested that the great flaw in most of today’s schemes for social change is their failure to grasp the ecological dimensions of human society. That flaw has been almost impossible to avoid, because it is not simply a matter of consciously held beliefs; many of the people drafting plans for social change these days have learned quite a bit about ecology. It’s the unexamined and often unconscious presuppositions underlying most such plans that blind them to ecological reality – and the struggle to confront one’s own presuppositions is very challenging work.

One of the things that makes the end of the industrial age so difficult for many people today, after all, is the way that it drives a wedge between science and what has often been called scientism. Science, at its core, is simply a method of practical logic that tests hypotheses against experience. Scientism, by contrast, is the worldview and value system that insists that the questions the scientific method can answer are the most important questions human beings can ask, and that the picture of the world yielded by science is a better approximation to reality than any other. Science and scientism are not the same, but it’s one of the most common habits of modern thought to assume their identity – or, more precisely, to fixate on science and fail to notice that scientism as a distinctive worldview exists at all.

Manila, Philippines — Scientists in Manila have declared war against a government plan to revive the controversial Bataan Nuclear Power Plant, which was built by 1984 but never operated. They dismissed the completed but not yet fueled plant as a sleeping monster and a monument of corruption.

Banks with large energy lending portfolios expect a deluge of oil and natural gas asset auctions as early as April as banks and federal and state banking officials squeeze banks to shed poorly performing loans, according to officials at the banks.

"Everybody is guiding their clients to expect that their borrowing bases will come down 20 to 30%" from last year, said Mark Ammerman, a managing director and head of Canadian-owned Scotia Capital's energy trading desk in Houston, said February 6

Those with natural gas-dominant reserves are likely to see borrowing bases cut more than crude oil reserves, he said.

HOUSTON--Saudi Arabia's oil minister, Ali Ibrahim al-Naimi, in a speech Tuesday night issued a warning against overzealous boosterism of non-fossil fuel energy sources in a time when oil prices have become "unsustainably" low.

"Promoting alternatives could chill investment in the oil sector," he said, in a dinner address to the CERAWeek energy conference in Houston. "It would be a nightmare if alternatives don't meet expectations."

(Bloomberg) -- Saudi Arabia, the world’s largest oil exporter, will more than double its spare capacity by the middle of the year to 4.5 million barrels a day as it brings the massive Khurais project on stream while cutting production with OPEC.

Khurais will add 1.2 million barrels a day to the kingdom’s capacity, more than the output of OPEC nations Qatar or Ecuador, Oil Minister Ali al-Naimi told the Cambridge Energy Research Associates conference in Houston yesterday. The target spare capacity has been 1.5 million to 2 million barrels a day.

ABU DHABI - Abu Dhabi will go ahead with its announced oil and gas projects, and will soon launch a series of new mega ventures worth tens of billions of dollars, to benefit from falling development costs, in order to stimulate the slowing economic growth.

"We will continue with our projects, there will be no delays", said Ismail Al Ramahi, manager gas processing division at ADNOCADNOCLoading..., while speaking to the participants of Gas Arabia 2009 conference, here in the capital.

The costs to construct oil and gas projects are sharply falling, as recession has hit global economies.

In a SPIEGEL interview, Russian Energy Minister Sergei Shmatko discusses plans for joint ventures with German engineering multinational Siemens, secure shipments of natural resources to the West and rumors that Moscow wants to start a gas cartel modeled after OPEC.

...SPIEGEL: Why is Russia, with its enormous energy reserves, so interested in efficient technology?

Schmatko: Because we cannot continue to waste these valuable natural resources to such an enormous extent. Of the 640 billion cubic meters of natural gas we produce every year, we consume 400 billion ourselves. If we can manage to save up to 100 billion cubic meters of that by 2020, we will be able to sell the gas and at the same time spare ourselves the extremely costly development of new production areas in Siberia.

A glimmer of good news touched the junior oil and gas sector Tuesday in the form of a takeover offer. Sure, one transaction does not make a trend, but it is enough to rethink the fortunes of distressed energy companies.

Construction of new refineries has become more pressing in the past few years, as growing domestic demand has forced Pertamina to import more fuel, straining the budget and weighing on the rupiah currency.

Barely a year after Congress enacted an energy law meant to foster a huge national enterprise capable of converting plants and agricultural wastes into automotive fuel, the goals lawmakers set for the ethanol industry are in serious jeopardy.

As recently as last summer, plants that make ethanol from corn were sprouting across the Midwest. But now, with motorists driving less in the economic downturn, the industry is burdened with excess capacity, and plants are shutting down virtually every week.

In the meantime, plans are lagging for a new generation of factories that were supposed to produce ethanol from substances like wood chips and crop waste, overcoming the drawbacks of corn ethanol. That nascent branch of the industry concedes it has virtually no chance of meeting Congressional production mandates that kick in next year.

WASHINGTON (Reuters) - The prospect for higher crude oil prices later in the year will boost OPEC's oil export revenues above $400 billion for 2009, the U.S. government's top energy forecasting agency said on Wednesday.

The U.S. Energy Information Administration revised up its estimate for OPEC's oil export earnings for this year to $402 billion, about $15 billion more than the agency forecast last month.

And here comes the fringe peak oil crowd warning of doom and gloom when it comes to that myth of infinite growth. In fact, the crowd can even now prove that cheap oil production has likely peaked in all but three countries in the world: Kuwait, Iraq and Saudi Arabia.

The immediate assumption is that this should cause oil prices to go up. But hold on to your hats, crude oil prices have actually collapsed.

PARIS (AFP) – Energy giant Total, France's biggest firm, announced the highest annual net profit in French corporate history on Thursday, sounding a rare positive note in a week of grim financial news.

In 2008 the firm made 13.9 billion euros (18.0 billion dollars) thanks to record oil prices in the first half of the year, which generated big enough revenues to overshadow a post credit crunch collapse in demand.

(Bloomberg) -- PetroChina Co., the nation’s top oil producer, increased exports of gasoline and diesel from its biggest refining plant last month as domestic demand growth eased because of the economic slowdown, its parent said.

PetroChina boosted gasoline exports by 8 percent and increased overseas shipments of diesel by 11 percent at the Dalian plant in the northeastern province of Liaoning last month, China National Petroleum Corp. said in a statement on its Web site today. The plant processed 1.07 million metric tons, or about 250,000 barrels a day, of crude in January, it said.

LAGOS (Reuters) - Royal Dutch Shell warned on Thursday that unrest in Nigeria's Niger Delta meant it may be unable to meet some oil export obligations from its Bonny terminal for the rest of this month and some of next.

The Anglo-Dutch energy giant said it had declared force majeure on its Bonny oil shipments with effect from Tuesday, Feb. 10 because of "logistics challenges" caused by insecurity in the delta, home to Africa's biggest oil and gas industry.

As Iraq prepares to pit the world's top oil producers against each other in a contest for access to prized oilfields, executives are worried they may have to almost give away their services to win risky deals.

The allure of the world's third-largest oil reserves and the potential for future, more lucrative contracts means competition will almost certainly be fierce among companies with little access to cheap oil elsewhere in the Middle East.

They cannot afford to miss out, even if the first bidding round for Iraqi contracts since the US-led invasion in 2003 carries little immediate prospect of the reward they crave.

WASHINGTON – Environmental advocates urged Congress on Wednesday to reinstate the broad moratorium on offshore oil drilling, but a key congressman said on that issue "the ship may have already sailed."

Rep. Nick Rahall, D-W.Va., chairman of the House Natural Resources Committee, said the political reality is that the broad moratorium across 85 percent of the country's Outer Continental Shelf — lifted by Congress last fall — is unlikely to be reimposed.

(Bloomberg) -- Moody’s Investors Service may downgrade banks and government-owned companies in Dubai, the second-largest sheikhdom in the United Arab Emirates, if oil-rich Abu Dhabi limits support to its own institutions.

If you want beans, pasta or milk, you're out of luck at the El Barquero Supermarket in Caracas, Venezuela.

"Lentils, grains — you almost can't get them," purchaser Jose Rodriguez said by telephone. "We're always having shortages of one thing or another … and you can't import them because the government controls it all."

Such is life in President Hugo Chávez's Venezuela, where the country's fortunes have largely traced the price of oil — from a relative bonanza as recently as last year, when crude went for more than $140 a barrel, to the current reality of rising poverty, crime and food shortages as the oil price plummeted to about $40.

The coming February issue of Gregor.us Monthly will be taking a look at Petrostate tail risk. This is the risk that oil production and especially exports from oil producing nations could collapse as a result of sudden political instability. That instability could unfold in oil producing areas alone, or, it could be a phenomenon that engulfs the entire country. Possibilities range from a widespread labor related shut down of UK North Sea oil production, to a total collapse of federal governments in Abuja, or Mexico City.

McKinsey & Company recently analyzed household spending on energy, for example, and found enormous waste. People heat their homes when they are not there and, thanks to leaks in their walls and heating ducts, also heat the airspace above their roof.

A programmable thermostat, which adjusts the temperature when people are out of the house or asleep, can cost as little as $50. For less than $1,000, people can buy the thermostat, as well as hire a contractor to fix leaks and replace their light bulbs with more efficient ones. In either case, the spending often pays for itself in just a year or two.

(Bloomberg) -- General Motors Corp., planning asset sales to keep $13.4 billion in U.S. loans, has attracted interest in its Hummer brand of light trucks from a Chinese company and a private-equity firm, people familiar with the talks said.

With a crippled economy forcing millions of cash-strapped Americans to entertain themselves at home, it's not surprising that one particular product is seeing a sales increase — condoms.

While car purchases plummeted and designer clothes mostly stayed on the racks, sales of condoms in the U.S. rose 5% in the fourth quarter of 2008, and 6% in January vs. the same time periods the previous year, The Nielsen Co. reports

The sales bump squares solidly with one of the nation's most common trends during any recession: nesting. At the same time, condoms make for a relatively inexpensive form of birth control at a time many cash-strapped families are hesitant to grow.

In regions where pumping and distributing water requires significant electricity use, policies that lead to reduced water consumption could address climate change more efficiently than requiring businesses and households to use less energy, according to water expert Peter Gleick.

"Some of the cheapest greenhouse gas emission reductions available seem to be not energy-efficiency programs, but water-efficiency programs," said Gleick, president of the California-based Pacific Institute, a global water research center.

Gleick notes, for example, that it may be cheaper for consumers to reduce the overall hot water usage in their homes than to replace their incandescent light bulbs with more energy-efficient alternatives.

PLYMOUTH, England (Reuters) – Can algae save the world again? The microscopic green plants cleaned up the earth's atmosphere millions of years ago and scientists hope they can do it now by helping remove greenhouse gases and create new oil reserves.

What would Albuquerque look like if it had followed the implications of Aldo Leopold’s land ethic when the Duke City started its great growth spurt after World War II? What could the city look like ten years from now if it saw this recession as an opportunity to remake itself and put Leopold’s ideas into practice as part of a strategy to sustain itself and prosper in the changed world of the future?

With chronic long term drought as our lot, with peak oil upon us, with the instability of financial markets and the decomposition of our consumer culture based on waste and excess, and a complete make-over in the way we fuel our culture and economy in the shadow of global warming, old ways of viewing our relationship to our environment simply don’t work anymore. Like it or not.

There is no historical proof that the ten biblical plagues that the God of the people of Israel inflicted upon the Egyptians, according to the second book Moses in the old testament, including poisoned wells, mosquitoes, smallpox, cattle plagues, avalanches of frogs, swarms of locusts, or a solar eclipse ever took place. But it is an undeniable fact that today, billions of people are suffering from hunger, that the fossil fuel supply for the future is insecure, that the global climate threatens to collapse, and that the global financial crisis is causing horrendous losses in the trillions, that millions of jobs are being destroyed, and whole branches of industry are in trouble, and the incomes of the masses are declining in the current global financial crisis. The modern plagues afflict the people just as much as the plagues of Egypt did more than 3000 years ago.

The Government today unveiled long-term plans for "green" makeovers of hundreds of thousands of homes a year to slash carbon emissions.

Officials said the package of measures to roll out insulation and low-carbon technology such as solar panels to seven million homes by 2020 would help homeowners who take up the scheme to cut their bills.

YEA, Australia (Reuters) – Firefighters called on the Australian government on Thursday to take a tougher stance against climate change in an effort to avoid more deadly bushfires like those that killed 181 people this week.

"Without a massive turnaround in policies, aside from the tragic loss of life and property, we will be asking firefighters to put themselves at an unacceptable risk," United Firefighters Union of Australia said in an open letter.

Governments across the world must commit to hundreds of billions of pounds in green investments within months in a combined attack on the global economic crisis and global warming, according to leading economists including Nicholas Stern.

AFAIK it is an index of the rates ship owners charge to lease their ships. Last year there were too few ships and ship owners were able to increase their rates significantly. With the slow down in trade there are too many ships and rates have dropped significantly. I am not sure of rates have dropped by 94%, I doubt it, but the index has. Baltic dry index represents costs of "dry ships", one of the biggest uses is for iron ore and coal. The index has turned us recently as China starts to buy iron ore and coal again.

The Baltic Index dropped from near 6,000 to near zero during the credit freeze. It was recently close to 1,000. There were rumors of shipyards full of new ship projects and a glut of shipping on the market.

That's what you get going from undercapacity to overcapacity so fast. I estimate my clients (ship owners) have 25-30% less to transport. They have to accept low rates as it would be much worse if a ship is jobless, or laid-up.

What you do see is orders for new ships getting cancelled, delivery is postponed, and so on.

News that the Baltic Dry Index enjoyed its biggest rise in 24 years with a hefty 14% rise on Thursday has brought much cheer to beleaguered dry bulk shipping stocks. However the upturn needs to be kept in context. This pushed the BDI to just under 1,500 points, a level which if forecast a year ago would have been low enough to turn the average shipowner white.

In effect what has been seen over the last week is a very welcome bounce in freight rates driven largely by a pick-up in Chinese iron ore imports that crumbled dramatically in the last quarter of 2008. Chinese steel traders and mills are now restocking, which has boosted shipping demand. Looking though at the longer term demand trend, major Chinese steel mills are still cutting production 20% to 30% and the figures for the industry in Europe and Japan are even greater.

The conclusion we should draw from this is that many of the goods that are today still on our store shelves, will soon no longer reach us. We therefore need to figure out how to get the articles we want, starting of course with the basic necessities, control over which we should never have given up.

The folks who maintain the index call each ship broker every day and get a quote from them on what it would cost to ship a fixed amount of dry cargo. They then use the resulting data to calculate the BDI. So, yes the quantity is fixed and the price fluctuates based on availability of bottoms. Essentially the ship owners engage in a daily bid for a fixed quantity of cargo and this then gets massaged and reported as the DBI.

Don't know where you went yesterday but I have one heck of a hangover.

China would continue to buy Treasuries in spite of its misgivings about U.S. finances, Luo Ping, a director-general at the China Banking Regulatory Commission, told the paper after a speech in New York on Wednesday.

"Except for U.S. Treasuries, what can you hold?" Luo was cited by the paper as saying. "Gold? You don't hold Japanese government bonds or UK bonds. U.S. Treasuries are the safe haven. For everyone, including China, it is the only option."

I think they're probably right: there's no place else to be in the current dangerous financial situation. I expect this will continue for awhile.

But they'll probably still be saying that, even when they're running for the exits.

"Chinese officials and energy company executives instead maintain that China was a victim of increasing oil prices, and that a large amount of the country's $1.95 trillion foreign reserves have to be used to import more than 40% of its daily consumption."

As goods pile up in wharves from Bangkok to Shanghai, and workers are laid off in record numbers, people in East Asia are beginning to realize they aren't only experiencing an economic downturn but living through the end of an era.

...The sudden end of the export era is going to have some ugly consequences. In the last three decades, rapid growth reduced the number living below the poverty line in many countries. In practically all countries, however, income and wealth inequality increased. But the expansion of consumer purchasing power took much of the edge off social conflicts. Now, with the era of growth coming to an end, increasing poverty amid great inequalities will be a combustible combination.

China offers both rulers and the ruled in Africa the simple, squalid advantages of shameless exploitation.

For the governments, there are gargantuan loans, promises of new roads, railways, hospitals and schools - in return for giving Peking a free and tax-free run at Africa's rich resources of oil, minerals and metals.

For the people, there are these wretched leavings, which, miserable as they are, must be better than the near-starvation they otherwise face.

Persuasive academics advised me before I set off on this journey that China's scramble for Africa had much to be said for it. They pointed out China needs African markets for its goods, and has an interest in real economic advance in that broken continent.

For once, they argued, a foreign intervention in Africa might work precisely because it is so cynical and self-interested. They said Western aid, with all its conditions, did little to create real advances in Africa, laughing as they declared: 'The only country that ever got rich through donations is the Vatican.'

Why get so het up about African corruption anyway? Is it really so much worse than corruption in Russia or India?

Is it really our business to try to act as missionaries of purity? Isn't what we call 'corruption' another name for what Africans view as looking after their families?

And what about China herself? Despite the country's convulsive growth and new wealth, it still suffers gravely from poverty and backwardness, as I have seen for myself in its dingy sweatshops, the primitive electricity-free villages of Canton, the dark and squalid mining city of Datong and the cave-dwelling settlements that still rely on wells for their water.

After the murderous disaster of Mao, and the long chaos that went before, China longs above all for stable prosperity. And, as one genial and open-minded Chinese businessman said to me in Congo as we sat over a beer in the decayed colonial majesty of Lubumbashi's Belgian-built Park Hotel: 'Africa is China's last hope.'

China is an ancient civilization, and a major chunk of the world's population. I don't begrudge them their place in the sun. This world should be big enough for both us and them. This world probably isn't big enough if we insist on having it all to ourselves.

I was listening to the latest Electric Politics podcast and the guest had an interesting point that I'm ashamed to say I hadn't thought about before. The point was that although we talk a lot about our trade deficit in the US and the need to do something about it, it's that trade deficit that makes it possible for the dollar to be a reserve currency.

Think about how disruptive it would be to the world's current economic system if we were to eliminate our trade deficit.

I remember that a decade ago people were seriously worried about what we'd do when the federal debt had been entirely paid off and we didn't have any more Treasury securities floating around for people to invest in. Seems ludicrous now, looking back. Yet, it would have been a good problem to have - much better than the one we've got now.

Similarly, I wouldn't waste a lot of time worrying about the US trade deficit going away anytime soon. If it does, that would be another good problem to have, but I very much doubt that we'll be that lucky.

Any hand wringing over trade deficits is a left over from the days of "national" economies. For better or worse, "national" economies are no more.

Most talk about U.S. deficits comes from politicians (cynically) trying to manipulate people's nationalism to get elected or from old guard labor types who haven't figured out the world has changed.

Did the average American worker get left out in the cold when the shift from national to global economy occurred? Of course. But don't make the mistake of thinking anyone in power will actually do something to change that.

Dr. James K. Galbraith makes it very clear that the last administration was directly involved in all the elements of the creation of this economic collapse. Not a mistake he said, but they absolutely had to have known what they were doing.

China would continue to buy Treasuries in spite of its misgivings about U.S. finances, Luo Ping, a director-general at the China Banking Regulatory Commission, told the paper after a speech in New York on Wednesday.

What else can they do? They can only spend dollars in America, unless they want to buy drugs like cocaine or heroin with dollars in Colombia or Afghanistan. A trillion dollars worth of cocaine is ... a lot of cocaine!

Like all the other problems of today, this problem will solve itself as Americans buy less Chinese goods. Whether this is from 'outsourcing backlash' or just generalized insolvency, the heyday of Chinese manufacture for the US market is over. As fewer dollars flow overseas, fewer dollars will flow back into Treasuries. At some point (the zero point?) the trade and currency exchanges will balance. China will not like this since their post- Mao growth has come from exports to the US. The US won't like it because this recycling is financing much of US government operations, including various bailouts.

To put another way, the Chinese are trying to bail themselves out by first selling us crapola, taking the cash and buying securities (lending our government money) which in turn is lent to banks to lend to us so we may buy even more Chinese made crapola. Economics is simple!

To Spend or to Save? Trick Question

McKinsey & Company recently analyzed household spending on energy, for example, and found enormous waste. People heat their homes when they are not there and, thanks to leaks in their walls and heating ducts, also heat the airspace above their roof.

A programmable thermostat, which adjusts the temperature when people are out of the house or asleep, can cost as little as $50. For less than $1,000, people can buy the thermostat, as well as hire a contractor to fix leaks and replace their light bulbs with more efficient ones. In either case, the spending often pays for itself in just a year or two.

This is a good article as it highlights the current mania about the 'Thrift Paradox' and the banking bailout(s). While it mentions these bailouts, it doesn't get into why. It's not because the government is humanitarian (bankitarian?) and desires to salve the bankers' suffering, it is because the banks are the fountains that spew credit.

The Fed/Treasury duo can print up a trillion dollars; give that cash to the banks and they can turn that trillion into ten or twelve trillion ... by lending each dollar to ten or twelve different people. It is credit formation that is the obsession 'du jour' of Capital Hill and Wall Street.

Unfortunately, this completely misses a main point. Money is the mechanism by which goods (resources) and services are allocated. Allocation is an almost automatic process by which rationing is done by price in markets (stores). The crisis exists because the allocation mechanism is broken; the cause is excessive credit, but the price mechanism is broken. It is the $100,000 house 'valued' (priced) at $400,000 that is at the core of our difficulties, not the banks' accounting problems. With more rational pricing (cheaper housing and more expensive energy, for instance) we would not be in our current deflationary difficulties.

Money matters ... not credit.

Americans have had the best of both worlds until recently; cheap, mass produced credit and valuable- seeming money. As Doug Noland has pointed out over and over, credit has been interchangeable with money for a long time. Ordinarily credit is destructive of money value; one exists at the expense of the other. This is what is happening now, a long overdue relative revaluation of money to credit. The confusion about money as credit is dangerous since credit cannot exist without money but money without credit the a preferred state of affairs; at which point money would equal real, static wealth. This is the priority the Chinese acknowledge; the primacy of money. That the dollar itself is more important than credit details. Even if the Chinese are not 'repaid' the existance of a valuable dollar is good enough for our times.

Too bsd the people in Washington and New York cannot think as clearly as Luo Ping.

No, neither money nor credit matters, real goods (things you can eat!) matter. One of the interesting ideas mentioned in the 2009 food catastrophe article discussed yesterday (see also the latest from Lester Brown) was that when global food shortages get more acute (probably within a year) the countries with holdings of "reserve currency" (especially China) will spend some of those holdings to compete for any grain still available on the global market. This will cause price inflation, starting with food prices, but spilling wider. US consumers will be competing in the same market, i.e., food prices within the US will rise too. I am not sure everything in that article is substantiated and correct, but this is an interesting concept.

I wonder if "demand destruction" might take care of the food crisis as well, at least for awhile.

People will be eating lower on the food chain, because of price, not out of concern for the environment. The corn that was going to ethanol plants will once again be available for animal feed. As with oil, we really are quite wasteful, and there's a lot of room to cut back.

I posted this yesterday as a response to the 'Food Crisis' article and will repost here:

According to the Food and Agriculture Organization of the UN, there is a more than adequate surplus of cereal grains:

With the global cereal harvest in 2008 hitting a new record, a significant improvement in the global supply and demand balance for cereals in the 2008/09 season is expected. After allowing for a forecast 3.4 percent increase in utilization, larger than the estimated increase in the previous season, a 10 percent increase in world cereal stocks could now be possible.

I think it's very hard to connect the credit trend to overall food production because there are too many feedback loops and inputs. Most farmers in the world do not depend on credit the way industrial farmers do, for instance.

- Of the many forms of agriculture around the world, some is industrial (as practiced in the US) and some is 'handicraft' on small plots as in Vietnam (major rice exporter). There are many differing soils, climate, growing seasons and crop varieties. Some areas are affected by drought while others are not. Some areas (Australia, Iraq, Somalia) are dust bowls, others are producing record harvests. The bottom line is some areas are and will continue to be productive and other areas will not be as productive. Only the industrial ag producers are heavily dependent on credit and ... so far, the US ag credit sector is unaffected by the other bank industry nonsense. As for other parts of the world with more labor intensive production, as long as seed and fertilizer (and diesel for irrigation pumps) is available, there will likely be increasing yields.

In the LIFDCs in Western Africa, the 2008 cereal crop is estimated 14 percent higher than in the previous year reflecting favourable weather during the growing season and production support measures. In Nigeria, representing over half of the production in the subregion, the output increased by 8 percent supported by the Government’s large fertilizer procurement programme to ensure availability for the agricultural season. In the nine countries of the Sahel subregion, cereal production increased by about one-third, notably in Senegal, Niger and Burkina Faso, where governments also launched various agricultural production support programmes this year. In North Africa, the 2008 cereal production increased in Egypt, the largest producer of the subregion, following a significant increase in plantings of wheat and rice. In Morocco, the cereal output more than doubled from the 2007 drought-reduced level but remained 20 percent below the average. In Eastern Africa, cereal production is forecast slightly above the good level of last year. In Ethiopia, despite earlier concerns about the late start of the rainy season, the latest forecast puts the cereal output slightly below the 2007 record crop. At the subregional level, this decline is compensated by an increase of 20 percent in cereal production in Sudan, in particular of the irrigated wheat crop that rose by 53 percent.

- The effect of credit decline is affecting the biofuels industry in lockstep with the petroleum industry; lower prices for gasoline reduce demand for ethanol. The demand pressure on food crops - particularly for corn and the knockon effects on soybeans (which are rotated with corn in the US) is declining as well. It's hard to measure by the bankruptcies in ethanol producers; there are multiple reasons for these producers' failures including most being over leveraged. The bottom line seems to be that less demand for biofuels will put less pressure on food crop prices ...

- Which in turn tends to depress prices for corn and other biofuel feedstocks which in turn tends to reduce farm profits. Much of the yield increase in the US is farmers taking land out of the CRP (Conservation Reserve Program) in which the government leases fallow land from farmers for 'conservation' purposes. All else being equal, corn and soybean productions and productivity will be 'managed' by land being taken from or returned to the CRP.

- High prices for seed and fertilizer is having an effect on production both in the US and overseas, even though fuel prices are low. These stubborn high prices are worrisome. Several persons here on Oil Drum have noted hign input costs effecting decisions on planting and how much yield will result. Multiplied by the large numbers of farmers worldwide this is a prescription for real trouble in the future. I suspect that access to 'liquidity' in some form is behind the higher prices. If the prices become too high - if Ben Bernanke's precious liquidity leakes into the food chain, a lot of people on Planet Earth are going to be faced with harsh choices.

Overall, there are limits to output; amount of arable land and available water are first. Next would be availability of fertilizer and useful markets. Add to this metric the 70 million or more hungry people added every single year. This problem is managable with the international trade in surpluses. The wild Card is climate change. Bad management and climate change would effect output the same way local oil consumption effects oil exports. The result would be reducing food availabilty even if there is an increase in overall worldwide yields. This manifested last year to some effect; government reacting to high prices restricted food export availabilty to overseas customers leaving them in dire siturations. Bad management and climate change would result in desertification, with lessened food output set aside to satisfy local demand leaving less (or none) for export; this in turn becoming a vicious cycle of increasing desertification reducing production further.

Finally, money is absolutely necessary. Credit not so, but without money, transactions would be barter. This would have an impact on agriculture, for sure! Crops are harvested in the Autumn (usually) but the food must be available to eat year 'round. Money is portable and (supposedly) endures over time, unlike a thousand tons of corn or two hundred head of cattle or ten thousand chickens.

There is a lot more that can be written about money; its utility is well proven. Its value ... ????

To put another way, the Chinese are trying to bail themselves out by first selling us crapola, taking the cash and buying securities (lending our government money) which in turn is lent to banks to lend to us so we may buy even more Chinese made crapola. Economics is simple!

This is a good example of the Law of Unintended Consequences. The idea of foreign development through export led growth was first proposed during the Johnson administration. The US deliberately pursued such a policy of building up its trading partners; the logic was that these partners would then purchase more US goods and life would be vastly enhanced for everybody.

No one thought of what would happen when deregulation permitted the return of rapacious titans of industry, such masters of the universe that they created a system which destroyed them.

I wonder how much lower home prices would have been if realtors got a flat fee instead of a percentage of the home price? How much smaller would new homes be if builders actually built what folks could afford instead of propagandizing them into mortgages that squeeze every penny they have?

The main problem with the realtors is that there are way too many of them. It has been way too easy to get a real estate license, the flood gates have been open for years. The result has been masses of realtors desperate to make a sale. And guess what? More than a few of them start cutting corners and even descend from the unethical into the criminal.

Why has it been this way? State real estate licensing boards are mostly composed of prominent real estate brokers. The brokers like having large numbers of eager, desperate, starving salespeople. They know that most of them will wash up and give up within a year or two. They are willing to accept that in order to filter out the few really good salespeople. In the meantime, they hope that the desperate salespeople will bring in at least a few sales from friends or family. They hope that nobody will cross the line and do something that is clearly illegal, but legality is pretty much a ceiling rather than a floor when it comes to defining what is acceptable and expected conduct. It should be no surprise that more than a few salespeople cross that line, and that some brokers don't pay close enough attention in supervising their masses of struggling salespeople.

The answer is clearly to considerably tighten the minimum licensure standards. We really only needed about 1/3 of the Realtors that we had, even when times were booming. Those boom times are gone and not coming back, so maybe now we only need 1/6 or even 1/10 of the Realtors we had at peak. Fewer Realtors would be easier for brokers to supervise. With less competition, there would be less incentive to cut ethical or legal corners.

I disagree on two points you made. Fewer realtors still working for a percentage commission on sales will still drive up prices to unrealistic levels. The realtor who gains experience during good times will still be motivated to stretch the envelope of ethics when conditions sour.

The other point is this recession is different and won't end just like the boom times of the 1990s was considered different and wouldn't end. The only way for this recession would be different is that there might not be enough fuel available to return to previous levels of economic activity. That is why a long term strategy of efficiency improvements and investment in renewables and nukes is so important. We may already be in the Hirisch Gap.

Not by any means "doom and gloom" --Drumbeat is a rare island of sanity in a sea of globalized psychotic thought disorder-- with Google we are exhorted to "look on the bright side of life", travel down the "sunny side of the street"

WASHINGTON (Reuters) - Sales at U.S. retailers rebounded in January, government data showed on Thursday, likely boosted by post-holiday discounts and providing a rare glimmer of hope for the recession-hit economy.

Of course, even the spinmeisters can't keep up the farce for more that a couple paragraphs.

January's increase in retail sales was the biggest since November 2007 and beat economists' expectations for a 0.8 percent decline. But compared to January 2008, sales dived 9.7 percent.
"It is a bit of a puzzle because consumer fundamentals remain poor. Maybe retailers lured shoppers with aggressive discounting. Still it's a small piece of good news," said Zach Pandl, an economist at Nomura Securities International in New York.

I keep reading this site because the articles posted here skate closer to the truth, and reflect a wider diversity of informed thought than any place else I have found. I love the Automatic Earth -- but talk about doom and gloom!

On a more fundamental level, I believe that people are built to con each other -- that seems to be one of the foundations of all living systems, and surely the basis of a "market" economy. But now we have "slid" into a recession-- that "no one could have forseen" because people have en masse become disgusted by the corruption of the house, and deserted the game.

And yet, all is not lost. The sun is still shining, and there is still plenty of oil and water. Utopia remains as much a realizable goal now as ever. We just need a new game we can all buy into -- I had hoped the new American Administration would point the way, but now that seems a vain hope. I believe the new prophet will emerge from the ferment of The Oil Drum!

Sharon Astyk has an interesting post about why the stock market will not rebound, and why so many refuse to think about it. (It kind of ties into something I've often thought: we always do what our parents should have done, financially...and it usually doesn't work out.)

Yes, most of the world is still very optimistic by TOD standards. But I'm also struck by how pessimistic people have become. I don't know if they believe we're on the edge of a permanent change (and not the kind we voted for last November), but they're at least considering it. A young man I know who was planning to hide out in grad school until this mess blows over is still planning that, but is also wondering what happens if it doesn't blow over and he can't get a job even with the PhD. A couple who have never had financial problems before, and still aren't, is wondering if they will lose their house if one of them becomes unemployed (even though they are in their 40s, have a lot of money saved, and neither has ever been unemployed). People are looking at the photos of the Australia fires, and wondering if it can happen in California...or New York.

It just seems like this kind of thing did not come up in casual conversation a few months ago.

I paid close attention to the press conference Monday, and especially to the questions asked. I've often found that the questions asked can be as or more revealing than the answers. The questions tend to be somewhat reflective of what is being talked about in the newsrooms, corridors of power, and watering holes, and thus constitute something of a "leading indicator". The "official answers", on the other hand, tend to be a "trailing indicator".

I noticed, that at least three different times, Obama was asked tough questions that really challenged the idea that the growth paradigm could be sustained any longer. My assumption is that these questions didn't just pop up independently in the three reporter's heads; they are reflective of a much deeper current of talk that is still beneath the surface, but is destined to become the mainstream conventional wisdom.

I have a quibble with Astyk's "investment is not saving" argument: when people keep their money as "cash" that generally means in a bank account. That money is being loaned out (by the bank), with interest, i.e., it is being invested anyway, no?

I have a quibble with Astyk's "investment is not saving" argument: when people keep their money as "cash" that generally means in a bank account. That money is being loaned out (by the bank), with interest, i.e., it is being invested anyway, no?

This is a very common misconception about how banks operate. The reality is that all money is loaned into existence. With every loan that a bank makes, it creates that money out of thin air.

Thanks -- I think the great thing about Chris Martenson's site is that he manages to combine an understanding of 'peak debt' with an understanding of 'peak oil'. A must-view and a must-read for every serious 'depletionist'.

I have seen Martenson's stuff (and it is nice). But we don't have "0% fractional reserve" yet, or the banks could bootstrap themselves from their current troubles... When you put $1 in the bank ("cash savings") they get to loan out another $10 or so based on that. That's what my comment above refers to. If they give you a small rate of interest on your "savings account" (or CD) that means you are sharing in that "investment" that is done based on your deposit. But most of the profits (if any) you don't see. The typical interest rate you get is lower than (real) inflation, so yes the system punishes savers and "forces" them to participate more directly in the ponzi lottery known as "stocks" and such. I keep looking for alternatives (buy what you know you'll need) but for the sake of "security" (being able to avoid losing the house in case of a job loss) I seem to need to keep "cash savings" on hand. At least I keep much of my savings in a credit union.

Monsanto is responding to the competitive environment in which all of us find ourselves. It's patent on Round-Up expired after 17 years like all patents. They would have died as a company without a patented product to take it's place. Fortunately for them, their bio tech research developed seed that withstood the application of glyphosate (Round-UP). The seed was expensive but it enabled farmers to eliminate post planting cultivation thereby making huge savings in machinery, labor and energy.

I resisted at first. My fields were some of the weediest around. Finally in about 2000 I switched to Round-Up ready seed. Growing corn was a matter of spraying once when the corn was about 2-3 feet high. A piece of cake. And one could have perfect looking soybean fields with 2 appropriately timed passes of glyphosate. Yields increased and costs declined.

Then they developed GMO corn that resists root worms and corn borer infection. Yields increased as these traits are stacked onto the Round-Up ready seed. Posters here who think that pesticides from oil are still sprayed on corn are living in the past. Another reason EROEI for corn ethanol is false.

Now the problem for Monsanto is that some bio tech seed patents will be expiring in a few years.

The idea, so often seen on TOD, that corn is human food is now the the current threat. The fact that most corn is used as animal feed which is a very energy inefficient use is not believed by most. They like the taste of meat, milk and eggs and don't care about the energy waste involved.

If the threat to ethanol and farmer's lively hood continues pressure will build and Monsanto can respond by developing bio tech corn which is not animal food but a variety that is best suited for ethanol production. They are already working on it and some seed better suited to ethanol is available. Albeit it is multi use corn.

With low corn prices and failing ethanol plants due to surpluses the game is on. Valero has purchased some of the ethanol plants from bankrupt Vera Sun ethanol. I suspect that as soon as oil companies control ethanol plants there will be an about face in the anti ethanol rhetoric.

In any case it is becoming clear that the main energy spokesman for the Obama administration is Vilsack not Chu. Vilsack has control of a department in control of food stamps, agricultural subsidies and grants for cellulosic ethanol development. Chu is a political novice and Vilsack will run circles around him.

If the ethanol industry could survive without government quotas or subsidies in a free market economy, then there would be less arguement. The fact that soon after implementation of ethanol legislation we got corn tortilla riots in Mexico and riots in India where they do not grow livestock for meat, but for dairy instead, is indication that some pain and suffering has been inflicted by an industry that cannot survive in a free market economy without legislation requiring the use and subsidizing of its products. If Monsanto can tack on traits that allow corn to be used without NPK fertilizer, we might have a better situation. The EROIE of corn ethanol is at the bottom of the scale of all fuels in use. Sugarcane ethanol is economical and exists without goverment legislation mandating its use. There have been reports out of Zimbabwe of starvation as the U.N. maize feeding program was able to purchase less corn as the prices rose. Elimination of life expectancy around the world may be attributed to mandated biofuels programs that replace human and livestock feed acreage with ethanol seed acreage. The initial ethanol shocks are mere portents of shocks to come if nations around the world will be coerced into greater expansion of ethanol quotas.

Interestingly, farmers and ethanol operators in the Southwest are moving toward Sorghum this year. It needs less water, and NPK, and produces just as much ethanol as corn. The DDGS are acceptable to cattle, also.

There has been some talk of nitrogen-fixing corn.

Look at it this way: When gasoline prices go up, and there's no substitute, everyone screams about the lack of an "Energy Policy." When we take preemptive steps in the face of "Peak Oil" predictions, some people whine about "Needing Subsidies."

At least we're not losing 150 lives, and $160 Billion every year guarding the "Corn Fields."

They might splice some legume or clover root gene onto a corn root. They might get some strain of plant that gathers fertilizer more efficiently requiring minimal applications.

On the home front people might eat less meat and more tofu. That might not help corn farmers, but it might lessen the consumer's risk of heart disease. A study of Seventh Day Adventists who are non-smoking vegetarians and abstained from dairy fats such as cheese found they live longer than the average person.

Riots in Mexico and India had nothing to do per se with ethanol.
And if you want to argue for a free market economy, why would you then want a UN feeding program for Zimbabwe??? By the way, do you even know what Zimbabwians can still buy anyway?
"Elimination of life expectancy around the world"??? What planet are you on? But feel free to have it your way and no ethanol quotas and see where the price of oil will go. I suspect that then even more Zimbabwians will starve....

Shouldn't that read, "old data on EROEI for corn.. no longer reflects modern practices.
I.e., there is nothing wrong with the concept of EROEI, but the data used for some computations of it is wrong for the following reasons...

Interesting post otherwise. A report was released a couple of days ago, which claimed ethanol could reach 30% of current gasoline consumption in a couple of decades (this assumed a lot of cellulosic from stuff like forest waste).
I would be concerned that our desperation for fuel might blind us to the potential for long term soil depletion. Soil should be considered a more important long term resource than fuel.

Our soil is just as fertile as it was a hundred years, ago. A crop of corn will deplete the nitrogen; a year of soybeans will put it back. No-till, low-till is helping (a lot.) The stover returns PK.

The Real problem with "eroei" calculations is basing them "entirely" on BTUs. Someone gave an example that a stick of firewood (or some similar amount) has about the same btus as a stick of dynamite. Obviously, the two are very dissimilar in the intended functions.

No, you provide evidence of the original proposition (that the soil is being depleted.)

I will save you some google time, though. You can't find it. If you back out I-NPK, genetically modified seeds, etc. yields are still as high as (if not higher) than they were 100 years, ago.

If you will just stop and think, this is entirely logical. A corn plant is no more inherently "destructive" to the soil than any other bush, grass, or tree. Admittedly, POOR farming techniques will rob a field of its fertility; but proper farming techniques can restore it.

As I said, "knock yourselves out;" but the same little beasties live in the soil that have always lived in the soil, and they do the same job they've always done. And every trace element that is in short supply due to monocropping can be reinserted with careful agronomy.

You mean like the poor soils of Illinois, Indiana, Ohio, Pennsylvania and Wisconsin, all of which were heavily forested before Columbus?

And Kdolliso, I agree that good farming can indeed increase soil fertility. The problem is that there has always and darn near everywhere been a lot more poor farming than good. Much of Greece, Spain, Iceland, Iraq, Iraq, Syria, Lebanon are deserts because of poor farming. China is currently going that route.

No-till is essential to rebuilding soils while also reducing workloads and reducing GHGs. Being anti-no-till is beyond my ability to logically follow. There are no negatives while it has very important positives.

I would suggest those who think otherwise haven't done any/enough reading as well as ignoring the many successful examples of no-till. Permaculture, which according to Mollison has incorporated natural methods since first being promulgated, recovers barren land using no-till. That is, even with land that has never been tilled, tilling is unnecessary. Proper use of mulching will enable soil to retain moisture and plant roots are as good at breaking things up as any wedge or hoe - though a tad slower. (I can imagine there might be cases where shortcuts are needed due to time.)

No doubt poor farming can cause soil erosion. But the question was about "depletion" that is nutrients in the soil. And no, you have not demonstrated that the "heavily forested" areas before Columbus were richer in nutrients then today.

"Today, about 112 million acres of cropland — 30 percent
of total cropland — are eroding at excessive rates, and other problems,
such as gully erosion, urban sprawl, and salinization, continue to threaten
the health of our soil."

"Salinization also threatens cropland productivity and the land’s longterm
health. Between 55 million and 60 million acres are affected by this
build-up of salts in the soil, caused mainly by irrigation of poorly drained soil."

"Erosion, sprawling development and short-sighted farming techniques are imperiling America's best dirt, including the soil that supports agriculture in the Upper Midwest, said Garcia and other food experts at Sunday's panel discussion. That loss and degradation of soil, in turn, drains the nutrients needed to continue growing healthy food for years to come, the speakers suggested"

"In the 150 years since we began intensely clearing, plowing, and cultivating the land that once supported our prairies and forests and wetlands, the steeper croplands have lost about half of their original topsoil. Erosion has stripped off the rich surface layer, including organic matter, nutrients, and living organisms. The displaced soil becomes just sediment - dumped into streams and swept into ditches or the atmosphere. That soil had been forming for thousands of years, yet in just a century and a half, we've depleted 50 percent of that original precious resource on our hilly lands."

"Over the past century, the effects of long-term soil erosion were masked by bringing new land under cultivation and by developing fertilizers, pesticides and crop varieties to compensate for declining soil productivity. However, such ‘agrotech’ fixes become progressively more difficult to maintain because crop yields decline exponentially as soil thins. While fertilizers can temporarily offset the effects of soil erosion, the long-term productivity of the land cannot be maintained in the face of the reduced organic matter and thinning of soil that characterize industrial agriculture. Replacing soil fertility with chemical fertilizers and genetically engineered crops can boost productivity in the short run, but a world stripped of its soil cannot, in the end, feed itself. "

David R Montgomery is the author of Dirt: The Erosion of Civilizations and professor of geomorphology at the University of Washington.

About 1.9 billion tons of topsoil were lost to erosion
in 1997, down from 3.1 billion tons in 1982. The reason: More extensive
use of such conservation practices as conservation tillage

This article seems to have been written along, about 1999. The author was concerned that the move to "conservation tillage" had slowed at that time. The Good News is that the move to CT has picked back up, and a little more than 50%, IIRC, of corn is now raised using low-till, no-till.

I will save you some google time, though. You can't find it. If you back out I-NPK, genetically modified seeds, etc. yields are still as high as (if not higher) than they were 100 years, ago.

Thats just it, by using "better" seeds, and lots of chemical inputs using yields as a proxy for soil health isn't valid. You need to hold everything fixed to get an apples to apples comparison.

Now I'm not saying bio-energy can not be sustainable. I'm just worried that short term time horizons might cause us to lose sight of the most important things. I would think bio-mass, that returns the ash to the original soil, might well be sustainable. But if the trace nutrients are transported long distances, and not put back, there is cause for concern.

Of course, Enemy of State, and Frank, there is ALWAYS cause for concern. The Good News is that MOST of the farmers that can afford $5,000.00/acre land are not fools. Most want to maintain, and improve their investment.

Okay. Leave the stover, and the roots. Go to Florida for the winter. When you get back the little beasties will have you "good to go." Sheesh! That was snarky, and not entirely accurate. See edit.

Edit: If you want to "juice up" the yield run the manure from the corn-fed cattle through an aerobic digestor, and apply the dry matter back onto the land. Or, if you use the corn for ethanol apply the DDGS back onto the land. The latter method will return virtually one hundred percent of the phosphorous since the only part used in the ethanol is the starch.

Eric, I understand you didn't make reference to depletion, Actually, E of S wrote: I would be concerned that our desperation for fuel might blind us to the potential for long term soil depletion. Soil should be considered a more important long term resource than fuel. A Statement I, absolutely, agree with, btw.

Sometimes the "reply" doesn't land exactly where you expect it to. And, I never meant to imply that farming couldn't deplete soil, only that Good Farming can produce reasonable crops without Inorganic Fertilizers. I realize it's not something that many farmers are going to want to do, right now; but, it is something we might have to do a whole lot of in the future.

So rather than admitting you were wrong, you've posted the above babble that blames the software VS the user of the software? Wrong about soil depletion *AND* wrong about the software being at fault. Gotta wonder what your next wacky claim will be?

The act of farming and removing the material is how depletion over time happens. Adding things back doesn't stop the initial depletion, just corrects for it.

As for your example of corn - not really realistic when the advocates of corn 4 ethanol put selling the ddgs as part of the profit.

Not just that nationalization is the "best way to go", but is actually the only way that will actually "work". He concedes there is a very remote possibility that Geithner's plan might work (with a probably right up there with flying pigs and snowballs in hell most likely, but left unspoken), but also states that the overwhelming probability is that Geithner's plan WON'T work, and that we will eventually have no choice to go to massive nationalization later - probably within about a year. So OK, we'll try "Plan A", waste a year and megabucks, then in last-ditch desperation go to "Plan B". Roubini made it very clear (and I agree with him) that we would be much better off going directly to the "PLan B" nationalization right now. But, it appears that TPTB are determined to take the long and expensive way around to that inevitable conclusion.

The change agent was asked about nationalization aka the Swedish approach and he laughed and said that Sweden had 5 banks while the USA has thousands. Nice sidestep for the sheeple-the solution is to nationalize Citi and possibly a couple more, not "thousands". IMHO his responses to legitimate public concerns and questions are very revealing.

Of course, whether or not the USA really NEEDS all of those thousands of banks, or instead could get by with considerably fewer, is a question that is very much debatable.

IMHO, individuals and households could get by perfectly well with nothing but a local credit union. There probably does need to be a network of small local banks to service the needs of local businesses, and maybe a few big regional and money center banks to handle the really big transactions.

Financial institutions have some risk in CDS (credit default swaps) instruments. These gaurentee a loan or bond without requiring the issuer to keep deposits on hand in case of default. With a record number of mortgage notes in default some institutions are on the brink of collapse. There is also a growing risk of overleveraged mismanaged corporations defaulting on their bonds causing causing those who wrote the CDS derivatives to fail and those who bought them to fail for relying on them in the first place. The derivatives trading brokers have resisted reform efforts.

Today is Charles Darwin’s birthday, and to commemorate the event the NY Times ran an article about him this morning.

The article reminded me of something I once read, and that is that a person’s concept of God greatly influences his political philosophy. I think the same can be said of Darwin. People tend to read Darwin like they do the Bible, taking the parts that reinforce their world view, and discarding those that don’t. Barzun explains:

[S]cientists are still convinced that Origin of Species assigns natural selection as the cause of evolution, whereas the sixth and last edition of the book reinstates two others: Lamarck’s use and disuse and environmental influences. Darwin later wrote a large book illustrating the further role of sexual selection. This cloudy state of affairs has even thickened. Here is not the place to trace out the lines of thought that lead from Darwin to the quite different Darwinism and on to the conflicting beliefs that are now held by the authorities in various centers of research and publication. Nobody questions evolution—there seems no reason to, but what is taught about its character and its mechanism is by no means consistent; yet the diversity of views is rearely confided to the student or educated reader.

--Jacques Barzun, From Dawn to Decadence, 1500 to Present: 500 Years of Western Cultural Life

One particular interpretation of the writings of Darwin that has become quite popular over the last few decades, mostly due to a highly successful marketing campaign by Right-wing think tanks, is that of the “survival of the fittest.” This is the law-of-the-jungle interpretation of Darwin, life as a free-for-all, everybody for himself; and the biggest, meanest and most self-serving SOB is the one who has the best opportunity for planting his genes in the next generaton.

But not so quick, says Olivia Johnson in the NY Times article:

Sexual selection, he (Darwin) argued (in The Descent of Man and Selection in Relation to Sex), was an additional force, responsible for spectacular features like the tail feathers of peacocks that are useless for (or even detrimental to) survival but essential for seduction...

His imagination told him, for example, that many female animals have a sense of beauty — that they like to mate with the most beautiful males.

So could it be that aesthetics—beauty—may play as big a role in who gets to see their genes planted in the next generaton as the bowdlerized list of human traits promoted so aggressively by Right-wing think tanks?

Walter Bagehot, in his short work Physics and Politics, also challenged the Right-wing world view:

He begins indeed by showing "Natural Selection" in the early stages of the march to civilization--the better organized, more cooperative groups conquer the less unified. But then more and more other qualities, inititatives, and ideas--liberty, free discussion, written law, habits of calm reflection, of tolerance and generosity--conduce to survival, because they make for an ever higher degree of cohesion. These virtues are the strength of the national state, whose power a less developed people cannot successfully withstand.

--Jacques Barzun, From Dawn to Decadence, 1500 to Present: 500 Years of Western Cultural Life

David Sloan Wilson gives a very insightful lecture about how the notion of individual- or single-organism-selection has dominated economic theory for the past four decades and how the idea of group-selection, a la Bagehot, was all but bannished from the stage. However, the belief that selection between groups can dominate within-group selection is now experiencing a resurgence of popularity. This has happened side-by-side with a re-discovery of Darwin and Adam Smith and a more ample reading of their writings than that demanded by Right-wing thinkers.

Wilson identifies Ayn Rand as the current poster child for Right-wingers. She is the latest prophet of “New Atheism,” he says, a “stealth religion” that has been around for many moons. He dubs her a “religious zealot” and intones that “if you look at her creative objectivism you will find that it is like religous fundamentalism in every way.” Her take on natural selection is like “professional wrestling,” he says. “Great fun, but don’t mistake it for a real contest.”

My main complaint about the New Atheism is that it’s not offensive or any of that, it’s just bad science.

Happy Charles Darwin's & Abraham Lincoln's 200th birthdays to all! The fact that two of the most influential people of the 19th century were born on the same day almost (but not quite) makes me think that there might be something to Jung's superstitious crap about synchronicity, after all. :-)

...the sixth and last edition of the book reinstates... Lamarck’s use and disuse and environmental influences. Darwin later wrote a large book illustrating the further role of sexual selection.

Darwin, like every other 19th century biologist, accepted the inheritance of acquired traits. He regarded it as a mechanism operating alongside natural selection. It's true that such so-called "Lamarckism" was de-emphasized in the first edition of the Origin, but it was still there. Criticism of this lack of emphasis in the first (1859) edition by respected contemporaries caused Darwin to lay more emphasis on the inheritance of acquired traits in subsequent editions. The idea of the inheritance of acquired traits wasn't widely discredited until the early 20th century. (See my post from two days ago regarding the influence of Darwin's acceptance of the inheritance of acquired traits on Freud & on the premises of psychoanalytic theory.)

It isn't about the survival of the most fit, per se, it's differential reproductive success that defines fitness. Hence, sexual selection is an aspect of natural selection, not a contradiction or exception to it. The charge has been made that natural selection is a tautology because the fit are said to have the most offspring and having the most offspring defines being fit. However, this is not a tautology when one realizes that it is environmental factors that 'select' the particular phenotypical characteristics that are most likely to result in differential reproductive success.

...the notion of individual- or single-organism-selection has dominated economic theory for the past four decades and how the idea of group-selection, a la Bagehot, was all but bannished from the stage. However, the belief that selection between groups can dominate within-group selection is now experiencing a resurgence of popularity.

I don't know much about economic theory but the level selection operates on is that of the gene, not the individual, the population or the species. This truth is not contradicted by kin selection (Hamilton) or reciprocal altruism (Trivers) and, in fact, these mechanisms are the seeming exceptions that prove the rule. Group selectionist thinking is perennially popular because it would appear to satisfy some liberal longing for fairness & equality. But nature doesn't care about fairness & equality; if we regard fairness & equality as desirable outcomes, we will have to promote these outcomes against the trend of selection towards adaptation.

Wilson identifies Ayn Rand as the current poster child for Right-wingers.

Rand was a bitter old thing who could never get over having lost her family fortune to the Bolshevik revolution. As a knee jerk reaction she became virulently anti-communist and spent her life extolling the "virtues" of sociopathic capitalism. It's poetic justice that she was a cig huffing nicotine addict.

Just such a radically different explanation was proposed by Charles Darwin. Darwin’s initial attempt to explain instincts had much in common with Lamarck’s theory. He believed that beneficial habits that persisted over many generations would make heritable changes in the organism leading to instinctive behavior in later generations. Gradually, however, he became dissatisfied with the idea of inherited habits as the sole explanation for instinctive behaviors, particularly when he realized (as Paley had before him but Lamarck apparently had not) that many of these behaviors (such as the moth laying eggs in cabbage) could not have originated as habits.The Evolution of Animal Behavior: The Impact of the Darwinian Revolution

Forgive this slight bend in topic, but I would be interested in your thoughts on this idea: What if resource wars are a way of preserving some minimum carrying capacity of an ecosystem?

We know a reindeer herd trapped on an island will go through a population spike and collapse. The reindeer (to my knowledge) do not gang up and kill one another. Nor do they have a mechanism for enforcing a limit to the number of births. As such, they have no way to avoid completely destroying the environment they depend upon. In essence, perfect cooperation results long term in total destruction. The island represents a kind of long term genetic death trap.

Could it be that humanity (or more likely primates) evolved an (ugly and brutal) fix for this kind of death trap scenario? A tendency to take sides and then wipe out a substantial portion of the population as a way of preserving the minimum carrying capacity needed to keep the population from a complete die off? Could this be a way of choosing the lesser of two evils? (I admit I don't care for the concept, but when did the Universe ask my opinion?)

In Collapse by Jared Diamond, he describes the resource pressure that the people of Rwanda were under and how it might have contributed in part to the genocide there. I have often wondered, since reading that piece, why didn't the people just cooperate to keep population within limits? Why choose the pain of genocide? But now I think language and laws are very recent and an evolved behavior is likely to predate them. And perhaps genocide "works" to break the death trap scenario under more types of conditions (no central government, no laws, etc).

I have no background in what happens during a population collapse, except Diamond's book. Have you any further insight?

Every species, humans included, are programmed by 4 bys of natural selection to seek to maximize Darwinian fitness, i.e., to produce as many offspring as the environmental resource base can support, and then some. It's true that humans can choose not to reproduce, governments can impose one child per couple policies, contraception can limit fecundity, etc., but such voluntary constraints on reproductive rate only delay overshoot of carrying capacity (K) & subsequent population collapse. In nature, predation, competition, disease, etc., can sometimes keep a population relatively stable somewhat below K, at least for awhile. Eventually, such constraints break down, population increases until it exceeds K at which point population collapse ensues. Sometimes populations collapse all the way down to extinction, other times they recover. But following overshoot & collapse, K is invariably reset at some lower value, due to the environmental damage (resource depletion) that occurs during overshoot. K may eventually creep back up to former levels, but only so long as population stays well below K.

The carrying capacity for humans biosphere wide sans fossil fuel & large scale agricultural inputs is of the order of a few hundred million. Fossil fuel exploitation, agroindustry & medical technology have allowed humans to grossly exceed K, or to artificially & temporarily inflate K. This overshoot is, of course, unsustainable, especially in the face of an impending Hubbert's Peak for hydrocarbons. While it's theoretically possible for humanity to decide to cooperate: to share resources equitably, agree to forgo reproduction thereby reducing population to under K by means of attrition, etc., history offers no examples of our species actually being able to achieve these outcomes in practice. Nor may there be time to avert population collapse by means of reduction of birthrate to below replacement level. I'm sorry, but I can reach no other conclusion but that human population collapse with all its attendant horrors is unavoidable at this point.

I agree about selection working at the gene level. It has to, the logic is simple and inescapable. If any of you have not read "The Selfish Gene" by Dawkins, by all means check it out. I think it's the very best "layman" intro to natural selection and evolution available. (He's published additional books since, but that's the original gem.)

Richard Dawkin's "Selfish Gene" (1975) is a popularization of the ideas of George C. Williams, as expressed in this 1966 classic "Adaptation and Natural Selection." Anyone with a background in biology might be well advised to skip Dawkins & go straight to Williams.

What is interesting is that this concept has been applied to social change. We may argue that western society has been in a period of relative stasis up to the present moment and that it is now undergoing a set of catastrophic changes (global financial crises, resource scarcity) and these will result in changes in societal organization to adapt to the emerging new environment.

Some societies may prove incapable of change and future generations of homo sapiens solarus may ponder the skeletons of a Bernankesaurus or Rubinraptor.

Eldridge & Gould originally made the uncontentious observation that the fossil record appeared to be punctuated. Their view morphed & "hardened" into the claim that the fossil record appeared punctuated because evolution is punctuated. We now have good evidence that rates of evolution vary from extreme punctuation to extreme gradualism, with most rates falling somewhere in between. It seems to me that when somewhat younger Gould wished to be remembered as having had made a significant contribution or modification to evolutionary theory, and believed that "punctuated equilibrium" would stand as that significant contribution. Later in life his ambition seems to have mellowed quite a bit, and his 2002 magnum opus: "Structure of Evolutionary Theory" is quite mainstream. The appearance of punctuation in the fossil record is largely an artifact of time averaging.

Even the most "fittest" and most "sexually attractive" individual can still get knocked off before breeding. Life is fragile, Stuff happens. Bagehot was right, a population can survive the loss of an individual, but an individual cannot survive the loss of its population. This is an inconvenient truth for all the neo-social darwinists that have pretty much been in control of our country for several decades now.

Even the most "fittest" and most "sexually attractive" individual can have a thousand ugly recessive genes hiding inside.

Sexual attractiveness is a proxy for the genetic component of health. Proxies are of course imperfect indicators. And evolution has favored genes that fake it, as well as genes that in some truer sense promote fitness.

...Not at all. They believe it says what others have told them it says. Pretty much nobody (including me) has read On The Origin of Species. And how many people have read the Bible cover-to-cover? I've read the first five books and the New Testament, but not all the stuff in the middle, and I seem to know more about it than 90% of the people I talk to.

Not that that stops them from presuming that their understanding of evolutionary theory is that of an expert and can decide what it is and isn't capable of better than those of us that do the research for a living ;)

It's official, DTO is now a 10-bagger in just 7 months. Trading today at $215.

One curiosity is the resilience of Sabine Royalty Trust (SBR) which is trading at about the same average price it has held for the past couple of years. It did spike in the oil run up (to $70) but it hasn't crashed. Unlike the Canadian Oil trusts which did not spike in the run up and have crashed to 1/3 of their pre run up prices.

I'm beginning to wonder if the low-cost oil producers, e.g. Saudi, might not be playing a clever game to drive out their competition. While paying lip service to reducing production they are clearly not doing it sufficiently to stem the price crash and inventory build up. If the price crash continues, many higher cost producers will be out of business or shuttered in. Then, when (and if) the economy recovers, the low-cost producers are the only game in town and can control prices more easily. The low cost of energy also aids the economic recovery so they are simultaneously increasing the probability of higher demand later while killing off their competition.

Perhaps Mick but whatever advantage it comes as a high price in lost revenue. And there's an even worse factor to deal with: future pricing uncertainty and volatility. I can't speak for OPEC but from the point of view of the US oil companies they would have been much happier had oil stayed around $80 or so instead of the $148 peak. All oil patch projects -- new drills, secondary oil recover, production acquisitions -- carry their own technical risks. But included in all every economic analysis is a future pricing model. Nothing kills a project faster then pricing uncertainty. The oil patch would readily accept a lower average price over time if they could accurately predict prices over a 5 to 10 year time frame IMO.

Not only have oil sellers lost income but they've delayed/cancelled projects which means future price run ups which means new projects being rushed forward which means more oil on the market perhaps combined with demand destruction cycles which means lower prices which means starting the whole messy cycle over again.

Futures only go out so far. What TOD would consider the futures market would require people making bets on and delaying income accordingly for several years. What the market calls futures is really just a yearly or monthly bet on price fluctuation.

You can't sell what you aren't producing. Literally thousands of oil/NG projects have been shelved over current pricing uncertainty. As most here know my client is one of the big unconventional NG players and by the end of this month they will have dropped 15 of the 18 drillings rigs they had running. They can sell all the NG they have on the futures market but that will neither get those wells drilled nor won't stop the big drop in NG production we'll see in the US in the next 12+ months. And when prices again support renewed drilling I think it's a safe bet many operators won't be as aggressive as they were the last two years.

Some projects are profitable when oil is $100 and aren't profitable when oil is $30. The futures market won't help with that. If you had a project that's profitable at $30 and can predict when the oil streams would go online, then you can just sell your production forward.

Not posted in a while I'm real busy right now. I'll be in Indonesia next week on one of the minor islands which will be interesting going for a wedding.

But as far as the next cycle I don't think we hit the demand destruction because of high oil prices. Our recession officially started at the start of 2008 and of course the economy was slowing before that. I think its sensible that high prices reduced the disposable income of folks and helped prick the housing bubble i.e as food/energy costs increases people where less able and willing to pay ever higher home rates.

Thus my argument that housing can go to zero seems well supported by historical data.
And note that 1940 was near the end of the Great Depression not the minimum for housing prices. And back then down payment requirements where much higher.

Thus on the economic side we can expect the US to probably bottom with median wages hovering around 20k and median housing prices hovering around effectively the same value maybe 30k.

Detroit is at 10k for selling right now with average asking prices at 70k. I'd suspect real median wages in Detroit are approaching 20k. So basically the entire country would on average be where Detroit is right now.

Now for oil you can do various calculations about cost of living using Detroit numbers and you can see once we are at Detroit levels it becomes difficult to buy a lot of gasoline with it in the 5-10 dollar a gallon range. You have a lot of variables here but the bottom line seems to be assuming both economic decline and rising fuel cost that the point at which the system can no longer absorb higher costs is with oil in the 200-800 a barrel range and incomes in the US hovering around 20k and housing reduced effectively to zero.

At this point any further increases in energy costs simply cause more people to fall into abject third world level poverty.

My point is that when looking at the oil patch and its investment decisions until we reach this point we actually won't know what the longer term investment in the oil industry will be.

Given that they are price capped i.e at some point attempts to increase prices will simply drop demand we can assume that investment will moderate substantially. You get your self in the situation as you approach the crunch point that and additional 5% increase in prices drops demand by 20%.

But if I'm right the numbers are significantly different from today before we hit the real end game.

Given this and whats happened we can see that the economy has a very long way to fall and oil prices have plenty of room to increase before we hit the wall. As we move towards this end game prices could be highly volatile I'd suggest that no one really knows whats going to happen. Given the nature of oil extraction I'd suspect that this one drop is sufficient to ensure that investment in future oil production will remain very low regardless of oil prices.

On the very short term until the oil markets go into backwardation its simply unstable.
This could mean the front months increasing or crashing to say 10-20 collapsing the futures markets before entering backwardation but as long as the contango persists and its profitable to store oil to sale it later the oil markets are controlled by the short term oversupply.

In my opinion the longer this contango persists the higher the probability that we will see the oil markets collapse as storage is finally filled to the brim and oil is rejected on the short term.

Checking TWIP we are probably approaching maximum storage levels now so over the next few months we should see which way the market is going to shake out the contango.

Whats interesting is that a crash to say 10 right now would devastate the oil industry and pretty much ensure soaring prices later on since very little of the worlds oil supply is profitable at 10 dollars a barrel. It would take out so much production and future projects that peak production would be basically assured. I think we have already past that point but certainly a steep drop to clear the current surplus would wreak havoc.

One could see a short term drop to 10 would cause massive volatility as producers world wide where forced to shutdown. We are approaching almost and entire day of excess oil in storage world wide I'm beginning to think that the collapse in price scenario is going to be the one that happens and it will effectively shut down world wide oil production for and entire day to clear the surplus. In any case the probability of a massive collapse in oil prices increases steadily as the market contango remains.

The oil industry itself is a large employer its collapse like the collapse of housing will throw a lot of the world economy into and even deeper depression and not just in the producing countries but over the entire complex chain. And ensures that later price increases will not be met with increased production.

But just to repeat myself one more time :)
Either this contango clears soon or the Oil industry itself may effectively collapse forcing the contango to clear.

I tend to agree that the unsustainable economic situation precipitated the oil price collapse. Your argument correlating the demise of housing with falling oil demand is compelling. And it p!sses me off that folks are trying to reinflate home prices.

I'm also very jealous that you're going to Indo. There's 2 types of islands there: Those with Surf, and those without. I'm not the most experienced traveler there but did have several great trips. Advice (unsolicited, sorry): Hang with the locals, stay with the locals, dress like the locals. If the other guests are forking out $100/night, you can almost certainly stay next door for $5. In a nice place. They'll be the ones missing out. I miss the fruit, the coffee, the fish. Which island, may I ask? If you travel inter-island, it's worth flying.

My best friend is marrying a local so I'll be deep in real Indonesian culture.
I used to live in Vietnam and have been to Malaysia several times so it won't be a shock but I love the diversity of south east Asia its probably the place where people from all over the world really mix together.

Back to oil my key argument is we can make a good bet on what the end really looks like.
Falling prices for anything that requires a long term loan and spiraling oil/food prices.
And we would see the rise of a true impoverished class like we have in South East Asia that are effectively outside the modern economy.

This could get worse from there never reach the point or reach it and get better but I think that this is the pivotal point at which our current civilization can be described as having failed. Two things basically fail the loss of our current energy supplies for endless growth and the safety net present in the wealthiest nations.

Once these have failed our civilization is over.

Given that I think peak oil and spiraling prices are a key component of the final collapse its important to continue to review and try and understand our current situation.

I'm personally a bit irritated since a fairly short term supply glut has effectively taken over all our indicators so we can't tell what the hell is going on. Coupled with this has been a highly resistant steep contango in the oil market that has worked so far to make storing oil for later delivery a profitable business. This "hoarding" is effectively the same distortion.

A good bit of the oil currently in storage today was pumped months ago and is simply acting as collateral for speculation in the futures market that takes advantage of the contango.

This is not a stable situation and eventually the market will correct only after this FINALLY happens will we actually know our real status. The actual glut is not all that large and in a large part its caused by the nature of the NYMEX market so its not only how much oil but where the oil is thats influencing prices. The post below talking about Brent highlights that the current situation is probably not driven by a global fundamental situation.

In any case for now all we can do is wait however I really think before the year is out the dynamics will start point towards my in case scenario and we see the system begin to evolve towards the incase. I.e continued economic collapse no longer results in steep drops in oil price. This is not to say the price won't be volatile but since we have no replacements we should begin a final move where rising oil prices simply directly cause more economic collapse or true demand destruction as more of the worlds population becomes marginalized and eventually falls into abject poverty.

This is a artifact of how the NYMEX contracts work. Regardless of why it still works to depress prices worldwide since so many contracts are keyed of US crude prices.

Maybe one day we could see global crude prices fragment with local markets. Dunno.

Regardless these sorts of situations simply mean the global oil market is highly unstable these new low oil prices are not a stable situation.

My opinion continues to be that before we see oil prices stabilize the market has to transition through a period of backwardation. So either the front month price has to increase substantially and stay there forcing backwardation out several futures contracts or the price has to collapse finally collapsing the outward contango then rise.

There are all kinds of ways the market can enter into backwardation but only after this happens will we see the oil market move to a more stable condition. Steep contango and a collapsing front month price is not a stable market and this cannot last forever.

If correct, this would be a replay of the strategy they followed circa 1985.

One counter argument is that they are now too tightly integrated into the world economy. They require a significant surplus for domestic reinvestment as part of the attempt to generate employment for a rapidly growing population and also to purchase the food imports required to feed this population.

Other reports on TOD and elsewhere indicated that they need a price of around $70 a bbl and an inability to return to this price level would result in internal instability.

I agree that his strategy has risk for internal problems in their society. However, as with any entity that has deep pockets, it may be possible to play the game long enough to achieve your objective of destroying competition. After all they are still making profit even a these prices.

“We are struggling, really struggling to treat patients around the world. If something isn’t done soon, more and more bugs are going to gain the upper-hand. There are simply not enough new drugs to keep pace with antibiotic-resistant bacterial infections,” Murray said. “We are sounding the alarm, and hopefully the world will hear it.”

We should all consider ourselves as being very, Very, VERY lucky to have lived within the extremely narrow window of human history when petroleum distillates were plentiful & inexpensive, and antibiotics actually worked.

That same time period has seen the greatest expansion of poverty in human history, the dispossession of the greatest part of humanity, the worst wars humankind has ever known, the loss of knowledge on a scale that we (as a species) will pay for dearly, and the complete hollowing out of the spiritual life of a large part of the population.

When I was three or four years old I stepped on a nail. I didn't tell my mom because I figured she would take me to the doctor & I was afraid of doctors. Two or three days later my leg was swollen & I was septicemic. Without antibiotics my leg would have had to have been amputated to save my life, and I probably would have died anyway.

When my youngest son was an infant he suffered a febrile seizure. We lived at a remote location on the Navajo Reservation at the time. Had I not had gasoline and a four-wheel-drive pickup for taking him out to meet the ambulance out on the highway, he might not have survived.

So yeah, I'll stick by my assertion that we're very, Very, VERY lucky to have lived during the age of antibiotics, cheap gas & the ICE.

Yes, you and your son were both lucky. But, again perspective has a lot to do with it.

While you got the antibiotics, how many parents didn't have the money to get their child treated and no longer even had access to "traditional" medicine because they had moved away from their village to a city for a job? Or where missionaries had effectively ostracized the local shaman or healer?

And how many children have parents that don't have access to the gasoline to get to a hospital in an emergency? (And again, had no access to traditional medicine.)

So, PLEASE, do not generalize from your experience to the entire world. You have been very fortunate, but more from where and to whom you were born then due to the time.

Its easy to say that those of us on TOD are living better than we could in 10th centruy Europe. In other parts of the world, they are living about the same as they were 100 years ago, just more crowded and with fancier killing devices.

In other parts of the world vast numbers of people are living lives far more impoverished than people in the same place lived 100 years ago.

Which suggests again that homo progenitivus will always win out over homo contracipiens

At any rate it's time to put female sterilisation back on the agenda:

An exciting, but largely unnoticed, recent development is the International Service Assistance Fund's (ISAF) Phase III clinical trial of a non-surgical method of female sterilization known as QS (quinacrine sterilization). QS has been performed in 50 countries on more than 175,000 women (06I1). It is so simple and low-cost that it can be performed by nurses instead of doctors (06B1). It can even be done in peoples' homes (even in the developing world) using a simple, cheap, plastic, disposable tool (06B1). QS costs only about a tenth as much as a normal surgical sterilization, a procedure that has long been the leading contraceptive method worldwide. The popularity of surgical sterilization and the potential of QS is all the more impressive when one considers that most of the developing world does not have access to surgical contraception, and will not have such access for the foreseeable future. (http://www.quinacrine.com) QS could revolutionize contraceptive provision worldwide.

Are you saying there are people worse off because of the discovery of oil and antibiotics?
Who are these people who no longer have access to "traditional" medicine.

What is/was the traditional medicine. Are they worse off because "they" moved away from their village to get a job......did they move so they could be worse off? Are people worse off because they never got to benefit from gasoline and antibiotics?

Maybe if you tell us your estimate of "how many" we can be suitably impressed.

It is not the discovery of oil and antibiotics that are the problem, though certainly oil has provided much of the cheap energy infrastructure that has allowed for the globalization of the global economic and political system that is the problem.

And I hold nothing against antibiotics. They are a great and useful medicine that will be truly missed. However, those antibiotics are distributed by a medical system that is completely integrated with the dominant global system. Because of that, access to those antibiotics is based on ability to pay and not on the need for the medicine.

For your other questions, with regard to who lost access to traditional medicine, who and why people move to the city, are the worse off, etc., I would encourage you to go do a little reading about colonialism and then continue on with some reading about the social impact of the "green revolution" and of multinational corporations. If you haven't come across these discussions before, then your education system has failed you.

Lucky, yes, but maybe not as lucky as you think. A huge percentage of all the humans who have ever lived are alive right now. Due entirely to the population explosion caused by, ironically, cheap energy and antibiotics.

Estimates of the total number of humans to have ever lived range from 40 billion to 125 billion. Which makes the current population anywhere from 5% to maybe 17% of everyone who ever lived.

You're right shaman...all about perspective. I'm sure those folks who didn't survive the plague in Europe when it wiped out the majority of the population wouldn’t have traded places with anyone around today. On the one hand I surprised more more folks with a better handle on human history then me haven't responded but I suspect they've lost the desire to beat dead horses.

The plague probably didn't wipe out a majority of the population. Some think as many as 50-60% of the European population died, but 30% is the more commonly quoted number.

The Black Death might have had Malthusian causes. It was endemic to the area, but didn't become a problem until the population was weakened by repeated famines and "peak firewood" (which meant washing became unaffordable).

Alternately, it might have been a different disease - something other than Yersinia pestis. Some have speculated that it was a hemorrhagic fever, like Ebola or Hantavirus. If so, there might be little we could do if it happened again, even with our modern technology.

The Black Death might have had Malthusian causes. It was endemic to the area, but didn't become a problem until the population was weakened by repeated famines and "peak firewood" (which meant washing became unaffordable).

Heck, & here I was thinkin' that it was all attributable to the Christians killing predators of murine Yersinia vectors cuz they thot they were the familiars of Witches! Isn't that what Riane Eisler would have us believe? (You may have missed that thread.) ;-)

Numbers like 30% (or even 40%) are probably estimates for the 1348-9 bout of plague rather than the gross impact. There were bad plagues as late as the early 15th century.

The century-long demographic collapse was apparently well in excess of 50-60% in many areas. The records are sketchy but there are some and you can also see the impact on stuff like food prices (which didn't recover to early 14th century levels until the 16th century).
Of course this can't be attributed to the disease alone which might indeed be more of a symptom but, for there to be such a multi-generational collapse you need many, many premature deaths to balance all the births.

TOKYO (AFP) — Panasonic Corp. has ordered Japanese employees in some foreign countries to send their families home to Japan in preparation for a possible bird flu pandemic, a spokesman said Tuesday.

Family members of Japanese employees in parts of Asia, the Middle East, Africa, Russia, former Soviet states and Latin America will fly back to Japan by the end of September, Panasonic spokesman Akira Kadota said.

The firm decided to take the rare measure "well ahead of possible confusion at the outbreak of a global pandemic," he said.

Eight people have contracted the H5N1 bird flu virus in China alone this year -- five of whom died.

I've heard a rumor that the USDA is setting up a database and is going to go around and identify ALL poultry everywhere in the country, even birds kept by backyard hobbyists. No doubt, this will be to facilitate a quick round up and mass destruction if there is an avian flu outbreak somewhere.

Maybe we can get Kunstler to write another novel: "A World Without Chickens".

hmmm, ok, so I can be a plaque victim in 14th century Europe or a AIDS victim in 20th century Africa. Is that the choice I'm being given?

You can cherry pick your circumstances all you want, it will teach you nothing. But if I ask if the average person alive anywhere in the world in the fourteenth century had a better or worse life than the average person alive anywhere in the twentieth century, the calculus becomes quite a bit more difficult.

That same time period has seen the greatest expansion of poverty in human history...

The 20th century, like every other, was a century of winners and losers. I think what he meant was that to be a winner in the 20th was better than a winner in previous (or future?) centuries. Being one of the losers sucks in any generation.

It would be hard to prove, I suppose. But it's often claimed that the disparity between the rich and the poor is greater now than it was a generation ago. CEOs make hundreds of times what their lowest-paid employee does, rather than 20 or 40 times. Matt Simmons says increasing inequality is where Limits to Growth went wrong. They assumed the rest of the world would catch up to the US, but instead of a car in every garage, it was two cars in American garages and shank's mare for poor Africans.

I'm sure subsistence farming in Africa wasn't a life of luxury. But it was probably better than being sold into slavery to grow chocolate for wealthy Westerners.

You are just showing the unsustainable exponential growth caused by the discovery of a new source of very cheap energy - the fact that we are able to use more and more of it indicates it has been getting ever more affordable, that will end once all the low hanging fruit is gone (maybe already?) - take that away and the picture can (will likely?) change adversely very rapidly ... especially for the people who have to import the energy they need.

You need to get out more ... the rest of the world does not live like the USA, the site deliberately shows default logarithmic salary scales to distort the picture to make the energy hog 'fat cats' feel better.

I believe what they mean by "something being done soon" is that drug companies need to develop new antibiotics. They haven't really done much of that in recent years - there are much higher profits in other sorts of drugs for both real and imagined maladies.

Along with the discussion of winners and losers above, it is important to remember that most microbes are not equal opportunity "infecters". So the rise of antibiotic-resistant deaths may be in part related to the rise in inequality and the fact that many people are living worse than their ancestors in the same area 100 years ago (as was mentioned above).

In case there are any doubters though, I can say that in my experience, over just 20 years of medical practice, the spread of antibiotic-resistant bacteria in common illnesses has been breathtaking. I am not looking forward to a future without medical research "advances" trying to keep up with the bugs.

...I can say that in my experience, over just 20 years of medical practice, the spread of antibiotic-resistant bacteria in common illnesses has been breathtaking. I am not looking forward to a future without medical research "advances" trying to keep up with the bugs.

As I'm sure you're aware, most antibiotics are derived from bacteriostatic & bacteriocidal compounds elaborated by soil fungi. Soil fungi are a poorly sampled taxon, it's true, but how many more effective antibiotics can there be left to be discovered? I don't think anyone has a good idea.

As you probably also know, many bacteria are capable of scavenging oligonucleotides from their environment and incorporating those sequences into their own genomes. Consider an antibiotic resistant pathogen lysed, perhaps, during sewage treatment only to release a fragment of plasmid carrying a gene conferring antibiotic resistance onto sediments or soils. Now suppose that an autochthonous bacterium happens to scavange this fragment & incorporate it. What implications does this scenario have for sediment/soil ecology, and what for public health? I don't think that any amount of medical research "advances" is going to keep pace with lateral gene transfer among & between the "bugs."

The only drugs they are focusing on are products the customer takes daily for decades-that is where the money is, along with getting a higher % of the population on the product. Antibiotics are not useful because they ideally fix the problem, negating the repeat customer/cash cow.

The reactions to and publicity of the recent Octuplets is encouraging: while this specific incidence of over-done reproduction is just a drop in the bucket of the big picture, the publicity is bringing the population issue (along with the issues of who pays for what, medical ethics, etc) into open discussion. And the reactions show that a large portion of the US population is leaning towards a view that one does NOT have the right to unlimited baby-making.

This whole story reminds me of "Idiocracy", which BTW will be airing on Comedy Central on Sunday night. If you are a fan of distopian comedies (a small genre if there ever was one), you will enjoy the film..

Paranoid, that was a stupid comment on your part. Solar Dude was not being mean to the irresponsible woman with 14 kids. She will never read his comment or have any contact with him whatsoever so how could he possibly be mean to her? She will get thousands of such messages however, and I do hope she does read a few of them. But that is not bloody likely. She will only be interested in the donations.

Sorry for the rant but how can anyone possibly defend the conduct of this outragous, stupid, irresponsible and very selfish woman?

I worte:
Bringing 14 children into the world when you have no means of support other than handouts is irresponsible and cruel. You should be ashamed of yourself.

I understand your anger 100%, but from what I have see, it is misplaced. I'm no shrink but this woman appears to either be deluded or mentally impaired. Part of me wants to slap her silly, part of me wants to institutionalize her. She may just be a run-of-the mill societal screw up, of which there are way too many, but I think the person that should be hung up by his thumbs is the IVF doctor (and the clinic).

He should also be sued for every cent of costs that the state incurs due to his lack of ethics, professionalism and social responsibility, because he could have so easily stopped it.

If I read Paranoid correctly, the message was that ranting or being mean does not improve things, except to perhaps alleviate some frustration on a personal level.

On the plus side, this clusterf##k may have benefits; bringing about badly needed changes while we still have some time, (assuming we do have time).

In the United States, the cost of hospitalization for one extensively drug-resistant TB patient is estimated to average $483,000... Because of the limited responsiveness of XDR TB to available antibiotics, mortality rates among patients with XDR TB are similar to those of TB patients in the pre-antibiotic era.

There's a chapter in "Darwin, His Daughter, and Human Evolution" by Randal Keynes (2002) that describes in absolutely horrendous detail the ravages of tuberculosis in 19th century England. (Annie Darwin died of TB at age ten, and her death is thot to have perhaps mitigated her father's reluctance to publish his idea of natural selection as the primary mechanism of evolutionary innovation.) Reportedly, there are strains of TB endemic to Russian prisons that are resistant to ALL known antibiotics. Pandemics will sweep the post-PO near future.

Though details are still emerging, the plan to close the state's $40 billion shortfall through mid-2010 includes a series of tax increases and program cuts, as well as a cap on state spending that would go before voters in a special election later this year...

...The plan relies almost equally on spending cuts and tax increases to close the deficit — $15.1 billion in cuts and $14.3 billion in new revenue — as well as $10.9 billion in borrowing. Funding for schools and community colleges would drop by $8.6 billion, by far the largest single spending reduction. Cost-of-living increases would be denied for welfare recipients and for the aged, blind and disabled; those savings, along with other cuts, would be more than $1 billion. And spending on state universities would be pared by $890 million.

The proposal would require state employees to continue to take off two Fridays a month without pay through summer 2010, and it would eliminate two of 14 paid state holidays. But the mass layoffs Schwarzenegger threatened this week would be avoided...

...If the budget plan is approved, Santa Clara County's sales tax rate would increase to 9.25 percent from 8.25 percent. Motorists would have to pay 1.15 percent of their vehicle's value to the state each year, up from 0.65 percent currently. And prices at the gas pump would jump 12 cents a gallon.

In the past six months, dozens of companies have halted, suspended or outright cancelled $230-billion in planned capital spending, according to the Canadian Energy Research Institute, which calculated that Alberta could now produce half as much oil by 2015 as expected a year ago, at the height of the boom.

In the article above about the missing Mexican island of Bermeja, there is a small picture of a map of the Gulf of Mexico. I can see that they have marked up the map with some information on the "missing" island but the picture is too small for me to read or gain any further insight. I tried clicking on the picture but that just brought pop-up ads.

I'd greatly appreciate it if anyone here (that's more computer savvy than I) can find the larger image out there to look at. (Assuming it's out there)

I don't know anything about thaat island...never heard of it before. But it's been quite a while since maritime boundaries were based on means and bounds. The boundary between US mineral ownership is very well defined coordinate system (I forget exactly which one...there are several used in the GOM). And I'm sure there are numerous copies of the treaty covering GOM mineral right available in both Mexico and the US.

But hey....I love a good conspiracy story as much as the next guy. I can see it now: "Indiana Jones and the Lost Island of Hoochie Mommas".

That's kinda what I was thinking too. I was sure that GPS coordinates and mapping etc. were used to establish the boundaries. It seems very dinosaur-ish to be using an island like that to reference their claim. I'm sure that the island's coordinates are well known and it would be a simple matter of flying over the area in a plane equipped with the right techno-stuff to measure the depth of the water at those coordinates. I was more intrigued that the island is no longer there. What a great piece of empirical evidence about rising sea levels if that is the cause.

There actually is some serious motivation behind such "claims". In the western GOM Shell Oil and others have taken OCS leases right along the US - Mexico boundary. There is some speculation that Shell has actually made a discovery that stretches across to the Mexican side. If true, Shell will drill, produce and deplete those reserves long before PEMEX gets their first drill rig into the area. And PEMEX doesn’t get a penny. Needless to so, this would infuriate the Mexican gov't and some would say it's cheating. But these are the same rules all companies drilling in OCS leases have to play by. If Exxon owns a lease which is being drained by Shell from an offset lease Exxon would have no recourse. It's called the right of capture. The MMS position: if you are being drained then you need to drill and produce your own wells. You can't let someone else do the work/spend the money and expect to get a share. Same goes for onshore TX. But not so in La. Many of their laws are based on the Napoleonic Code and are thus weird. I know…I grew up in New Orleans).

When/if it becomes well established that some company is draining oil out of Mexican territory from the US side I'm sure we'll see declarations of outrage from Mexico and maybe a few lawsuits in the World Court regardless of where anyone says the boundary is or isn’t

"You can't let someone else do the work/spend the money and expect to get a share. Same goes for onshore TX." - Not true as to onshore Texas directional wells. The directional survey must prove up the actual hole and insure that the production comes from the leased acreage. Of course, some reliance on lawyers to do an honest title opinion is required. I leased some acreage to a big'un who had to have the acreage since they had that particular acreage since they had a no-drill lease on the offsetting acreage, with a provision that we got a minimum of 25% of the royalty, 22% on our acreage, for any wells drilled on our acreage - that was about the discount they got on the no-drill lease, so everybody came out even.

For vertical wells or lease-line drilling, your comment is correct, but increasingly all of the opportunities to capture other folks resources with vertical are gone.

Unfortunately, there is no such thing as absolute lat and long, unless one views the world as a perfect spheroid. The earth is actually an oblate sphere, usually defined with a major and minor axis. Different mathematical methods "transform" or map the spheroid satellite data onto a model of the earth's shape.

Then, because we do not view our little plot of land as spherical; in lat and long terms, but in feet or meters, we "flatten" our world by a mathematical transform to say we are y meters north of the equator, and x meters east of the Greenwich meridian, (or whatever reference one chooses). This method inherently has errors as you move away from the reference point.

To minimize errors there is a definition of constants and a central reference point established as a basis for a measurement standard in a particular region.

For example, in the US the most common standard is UTM, or Universal Transverse Mercator. The central reference point is in Kansas, which is the mathematical center of the country. There are others systems which are used for convenience, such as UT3 when a city or county straddles a major meridian, (6 degree increments). A survey benchmark (small brass button) on my sidewalk will have a different lat/lon position, depending on which method is applied.

Other parts of the world have used the same basic principles of geomatics, (essentially spherical trigonometry) but use different constants or reference points. A survey quality GPS system can be set up to read out lat/lon or distances from a reference point in about 70 to 100 different standards.

Really anal systems use time and vector referenced databases of geomatic data points. This allows for continental drift compensation.

As for GPS co-ordinates, the only thing that a GPS receiver can tell you for sure is where you are relative to the GPS satellites. It is assumed that the earth hasn't done something funky like shifted it's axis or changed it's rotation suddenly.

IOW, where we are is only relative to somewhere else.

If you are confused, you have very right to be. Sorry for TMI, but you did ask.

Subsidence in the GOM is nothing new. If you go to High Island, Texas SE TX coast) you can drive down blacktop roads right into the gulf waters. The coastline has been subsiding for many millions of years. The gulf coast is what's called a geosyncline = a large reagion where continued subsidence and depositon has gone on for extremely long periods. Consider this: we can drill a well down 30,000' on the TX shore line and penetrate sand that wee depositied on a beach. Think about that: that beach has subsided almost 6 miles into the earth. Sinking an island a few dozen feet doesn;t get much notice to a geologist...unless he happens to own a beach house there.

Sinking an island a few dozen feet doesn;t get much notice to a geologist

But at what rate of sinkage? I would think geologic rates are on the order of 1 centimeter or less per year, i.e. not much faster than sea level rise. Unless the slope was unstable, and say an underwater landslide took away its base.

"General Motors Corp., planning asset sales to keep $13.4 billion in U.S. loans, has attracted interest in its Hummer brand of light trucks from a Chinese company and a private-equity firm, people familiar with the talks said."

I'm quite sure that a fast build-out of distributed alternative energy would scare the hell out of major oil producers. Should they learn to live more within their means, they should realize that a dramatic drop in production only ensures a longer period of time during which they can rely on oil income. There are too many things it is needed for for it to just stop being used.

You read it here first: I'm calling this economic crisis "Great Depression II," so when the big media outlets start calling it that (about the same time as the last employed American worker gets his layoff notice in 2010) I can invoice a nickel for each use. Although all industries are suffering, not all industries are suffering equally. The Motorcycle Industry Council, the U.S. motorcycle industry's trade group, released select data from 2008 sales figures from the 12 most-prominent OEMs last week, and the news isn't as gloomy as you'd expect.

Although sales were down 7.2 percent overall, much of the decline was in the sputtering off-road segment, down 30 percent. But that decline was greatly offset by the boom in scooter and small-bike sales during the spike in fuel prices in the first half of 2008. Scooter sales were up 41.5 percent among MIC members, and that doesn't count smaller manufacturers like Kymco, Hyosung, TGB and the colossal number of mainland Chinese factories. Dual-sport bike sales were also up 22.8 percent - perhaps due to the new models introduced from BMW, Kawasaki and Honda - which greatly increased the number of models in a small category. Overall on-highway motorcycle sales only decreased 5.6 percent. Not bad when the automotive market dropped by almost 19 percent from 2007 to 2008. BMW even reported a growth in 2008 U.S. sales, with 11,839 units registered to customers -- 71 more than 2007.
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I have written much before about this trend to mopeds, small motorcycles, and scooters, and I expect both new, and especially used sales to continue to be strong as the economy implodes.

It is the logical downward progression path from a very expensive two car family to a one car family & a very cheap, but long affordable 2-wheel ride. Bicycling, car-pooling, buses, and mass-transit will surely help the situation, but IMO, a growing segment of the US pop. will enjoy the cost and time savings of small, personally schedule-able, mopeds, motorcycles & scooters, and perhaps pedal-bikes with very small ICE or batt/electric motors.

IMO, the govt. could greatly help the poor and unemployed extend their declining wealth, yet retain much personal mobility, by removing many of the current heavy restrictions against the small personal ride. My belief is that the original basis for many of these laws was to help bolster the growth of the Iron Triangle. We need better ideas as we go postPeak.

We have seen many photos here on TOD of other countries that have lots and lots of mopeds, small motorcycles & trikes, and scooters.

On that note I would recommend "The Worlds Fastest Indian" to anyone interested in motorbikes. The film is based on (but not 100% accurate) the true story of the setting of world record 200+mph on a 1 litre enclosed motorcycle. Just for Bob there is a some O-NPK and a lemon tree

There are a host of very aerodynamic three wheel high milage vehicles in development, the Aperta, Peugeots Hymotion 3, The Venture One, The Piagio MP3 and Vectric are looking at a fully electric three wheeler. Check out the aerocivic if you haven't seen it already. 95 mpg from some crazy areodynamic mods to a hybrid Honda Civic.

It will probably take a decade or more for the media to discover it, but this isn't a Great Depression, it is a Great Decline. Depressions are something that go on for a while, then there is a recovery and a return on the upward growth trend. That isn't going to happen this time.

Is there anyone here doing anything to mitigate the impact of all the 'peaks' heading our way or are we just baaaing?

If so, I would like to hear what you are doing. TIA

EE question: In a way a solar panel is like a battery in that it is XX VDC. If you short out a battery it will try it to keep up and self destruct with too many amps. If you short out a solar panel will it self destruct? What about a very low resistance somewhat higher than a direct short (say 10 ohms)? OR is it that the panel cannot put out more than it rated wattage no matter what the resistant load is?

EDIT: I found the answer. It seems the short circuit current for my 130 watt pannels in bright sun is max 8.2 amps. Since I am wiring with 14 size wire, a short somewhere will not be a problem for wire size. Of course the output is nil.

"Is there anyone here doing anything to mitigate the impact of all the 'peaks' heading our way or are we just baaaing?"

Well, Lynford I'm hoarding Jim Beam and chuckling a lot. Old "back to the lander" old hippie, turning rapidly geezer. I've got shelter, heat and water covered. Food is always something you can do better on but I feel pretty comfortable there to. Diet might be kind of dull, but will do. My kids are well trained and ready to take over if need be.

I've seen amazing things in my life, I watched "echo" our first satellite as it crossed the night sky. Just a big mylar balloon, that we could bounce signals off of and actually get a real time feed from Europe. TV, rural electrification, telephones. Did the engineer thing when electronics was vacume tubes.
I have an inkling the engineer types will do well on the land, it just fits, while the ahemmm real thinkers, finance, psychology , behaviorists, will be busy talking and writing as the food supply dwindles. Anyone counting on their ability to use words instead of deeds and action. The ability to dig in the ground for 8 hours will top any degree. Lessons in wood splitting. Pick one up, swing the ax, and then do it again. No thought really, and you learn where exactly to hit that chunk of wood, the grain and heft talk to you if you listen. It talks to you as you pick it up and place it on the splitting log, you have to listen. Below zero is big time great for splitting wood, it almost leaps apart when frozen solid. Elm you will chase all over your yard, even at 20 below.

I'm doing the "I'm just watching thing" kind of fun here to see the frantic posts here correcting the smallest difference. Says something. I'm in Airdales and Todds, company, but sometimes it is a chuckle to watch the spinning wheels.

I've seen wonderous things, I've also seen the horror, I've been the horror. I've killed, sanctioned by my government. I deal with that everyday. The thought I may have to again is not pleasant.

So yeah, ring side seat, drinking my Beam, throwing a log on the fire. That's my prep, and how I deal with it all.

I have been awake most of the time for the last seventy-six years too. Just an old fighter pilot with a leaning to engineering and electronics. I built a converter to my ham receiver to listen to Sputnik. Yeah, we are just getting ready for what might hit the fan also. It won’t be neat but we will do. I think with the fifth stage of "Acceptance" comes a desire to assemble your caca and I was just wondering how others here are doing it.

Lynford - I have drastically reduced all of my energy loads, except what I need to work, which is operating oil and gas leases. I have arranged for local, stranded gas for heat, and probably someday for cooling from the Oklahoma sun. Built a house with SIPS panels, using some PV solar panels, but not enough to power the ground source heat pump which has double the required amount of underground footage, and from 300' wells vs the recomended 200'. Have a shallow water well with adequate very good water - enough for the house, a cow and a calf and a 35 x 80 garden. Have enough pasture to support them as well, but do not have the equipment for cutting hay. Working to keep everything in very good repair, stocking bulk and dried items in a small freezer just for that purpose. No mass transit but close to a busy hwy and a lot of commuters, but do not know what they will do WTSHTF. Have had a CNG truck for a couple of years and keep filled and in top shape, with a spare very similiar vehicle which runs on regular gas (local source for CNG is fairly close, but I plan to use a home filling appliance when things get tighter.) Plenty of local deer, but I don't hunt cause I like watching them too much - neighbors lease their acreage in season, so there should be plenty if need be when the hunters stop coming from 50-100 miles to get Bambi and family.

Health care worries me, but get enough exercise keeping things up to feel good. I do worry about neighbors who are not planning, or doing anything, but most also have water wells and gardens. Do rely excessively on one neighbor for the services of his bull (for the one cow). Need to learn to can, but do dry some veggies and keep in freezer w/ bulk foods. Do not have ehough financial reserves to keep me happy or any bartering goods, so concerned about security as well. Well, have unharvested firewood to barter, but would like to keep it that way since I have a small wood stove, just in case.

Overall, I think I can get by until we reach the new norm, or realign homeostasis, for our society.

Healthcare is probably my biggest worry, too. Unless you're Bill Gates, it can wipe you out. Even if you have insurance.

A friend of mine used an inheritance to retire and buy an off-the-grid home in rural California. Well, kerosene fridge, wind turbine, solar panels, plus a generator for electricity. But then she was diagnosed with breast cancer. She was in her forties but looked much younger and seemed about as healthy as a person can be. She ran marathons and was a vegan. But she had to return to SF for treatment. When she went home, she could not pump water from her well or start her generator because of the surgery. Luckily, she had a brother living nearby, and her mom flew in from Canada to stay with her. And she had been very conservative with her money. (The reason she was living off the grid was because it made the property so much cheaper.)

She's now doing well, but I could see something like that wiping you out in post-oil world. If you're single, I guess it's an easy decision. Sell the farm to pay for healthcare. With a family, though, there would be some tough decisions.

Is there anyone here doing anything to mitigate the impact of all the 'peaks' heading our way

For myself I've got some stocks of material, some land via inheratience in a more rural setting that I am permaculturing as best I can, and am trying to spin up a timebank. If the timebank works as I HOPE, I see it spreading at a far greater rate than at the present time.

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